Of the total commercial borrowing of Rs 54 trillion, the large corporate borrowing is 25 trillion, SME is 10 trillion, retail is Rs 12.5 trillion and micro enterprises is 5.5 trillion. Next, V. Vaidyanathan, Exec Chairman at Capital First, commented on SME NPAs, while speaking at Assocham’s Bankers Borrowers Business Meet in Mumbai. For PSU banks, SME NPA is 22% and for micro-SMEs is 11%. NPA is lower for private banks and NBFCs. The NPA for micro entrepreneurs is the lowest.
What is changing recently is that the conversation from most players in the industry is about retailization of their loan book, ie lending to the middle class of the country. Retail lending as a percentage of non-food credit has increased from 20% to 25% in 3 years. Retail as a percentage of incremental lending has shot up and RBI should continue to increase the number of players in this sector.
What are the factors enabling this change? One is the push from the regulators. The government of India is also pushing for lending to entrepreneurs. Close to Rs 4.6 trillion of Mudra loans have been disbursed, of which 76% are to women. 10 years ago, lending against income tax returns was the norm. That is now changing. There is access to bureau records and GST data. Income tax returns is becoming less important. Focus is more on cash flow and less on balance sheet. A lender in Africa is looking at contact data and saying that more than 50 contacts is a positive indicator. Similarly, talking to same 4 people every day was considered positively.
