Mundra said considering the credit scenario of the banking industry in the past few years, it can be formulated that big industries are a major reason why the banking industry’s credit growth is slow. That’s why paying attention to MSMEs will improve our loan book, he underlined.
He said there are many “strong and logical” reasons to showcase the importance of the MSME sector in strengthening banking industry because big industrial loans have huge problems and banks cannot merely rely on consumer and/or retail loans.
“There is a very strong case for the banks to look at the MSME sector. They should not look at the sector as a matter of any compliance of government policy, as a matter of charity and as a matter of meeting some target,” Mundra said.
“There’s a limit to which the entire banking industry could remain focus on individual loans or consumer loans. Consumer loans can be meaningful if the people who are availing those loans are engaged in productive activity and they are able to generate income which can be used to repay those loans,” he added.
Mundra pointed out that despite being the proven growth engine of Indian economy, 30 per cent MSMEs (of existing 48 million) shut shop barely within a decade, of which 80 per cent are unable to make it due to lack of credit.
Speaking on the newly launched counsellor programme of SIDBI, Mundra said it will help bridge the gap in demand and supply of small enterprises and improve their communication system.