State Bank of India would choose the co-origination model provided to the financing requirements of MSMEs and identified that the MSMEs are constrained in terms of money flows, time-space in realizing receivables, among others, and also the level of banker’s confidence in funding MSME. On this SBI Chairman Mr. Dinesh Kumar Khara was quoted as saying that collaboration is a good model than lending straight to MSMEs.
Khara said that at the time of identifying solutions they felt that apart from lending directly to the MSMEs, there is a route forward in terms of collaborating with these NBFCs with the largest fintech who have the capability to process the structured and unstructured data to have a good sense in terms of assessment of risk. Based on this assessment, Khara said that bankers feel very satisfied in lending to the MSMEs. Khara added that there is another option of financing based on cash flow and not based on the balance sheet because it is evaluated that the balance sheet and the financial statement are not availed in a form that is anticipated by any lender. Also, Khara described that there is a broad spectrum of MSMEs in India which work in host areas, and often the kind of financial data coming from them is not well organized.
So the data available here is fully organized other than any other big company. He said that it is the kind of spectrum which SBI is engaged with. Hence, different levels of maturity of MSMEs, the MSMEs comfort level also different from the bank. The currently announced scheme is also banking finance and another option is sweat equity. They have got the whole gamut of solutions that are accessible, the sweat equity, which is to be brought into MSMEs. Khara said that recently launched a new scheme where could finance some kind of sweat equity but it is in the initial stage.
SBI Chairman said that banks required having confidence in different models of the MSMEs and also the commitment level of the businessmen. Then only it would increase the comfort level for any bank and they would be in a position to help the sweat equity kind of requirements.