 "Bank Funding: Challenges and Opportunities")
From left to right: Siddeshwar G. Kammar, Hon. Secretary, KCCI; Rama Naik, GM, Karnataka Vikas Grameena Bank; Vasant N. Ladawa, President, KCCI; and Dr. N. A. Charantimath, Chartered Accountant, Charantimath Associates at Business Standard Smart Business in Hubbali on 24th December 2014, in association with KARNATAKA CHAMBER OF COMMERCE & INDUSTRY.
In addition to the traditional route of bank funding, small and medium enterprises (SMEs) should actively look at other avenues for raising funds, and diversify their options. Given the various issues of raising resources easily from the banking sector for SMEs, N A Charantimath, a highly regarded chartered accountant, urged SMEs to look at instruments such as factoring, leasing and securitising among others.
Delivering a talk on ‘Bank Funding: Challenges and Opportunities’ organized jointly by Business Standard and Karnataka Chamber of Commerce and Industries (KCCI), Hubbali, Charantimath regretted that banks were not forthcoming enough to support a vital sector.
"Innovative funding options like private equity are available. Putting the blame always on the banking sector is not a healthy trend," Charantimath said. He however maintained that the banking sector should take more active steps to support SMEs.
He pointed out that SMEs contributed 40 per cent to industrial production and 17 per cent to the GDP. Lack of funding has been a major constraint, he said, and added that only 12 per cent of the SMEs’ funds came from the banks. Reduction in cash margin, collateral security, credit rating, lack of communication and competition from large enterprises and imports were the major problems faced by SMEs in availing funds from banks, Charantimath asserted.
Speaking at the same event, Rama Naik, General Manager of Karnataka Vikas Grameena Bank, said the banks were relying on three Cs - Capital, Capacity and Character of the borrower - while lending funds. Admitting that bank managers were wary of the risk factor, Naik said the banks should look at the opportunities instead and weigh the merit of the proposal rather than harping on the risk factor.
KCCI President, Vasant Ladawa was critical of the banks’ attitude towards SMEs. He said that banks were not following guidelines issued by the Reserve Bank of India on funding MSMEs. The RBI guidelines stipulate that 60 per cent of a bank’s lending should be to MSMEs, but it stands at 13-17 per cent. He also pointed out that the risk factor was minimum in funding MSMEs as the MSME’s NPA ratio was just 0.32 per cent.
In addition to the traditional route of bank funding, small and medium enterprises (SMEs) should actively look at other avenues for raising funds, and diversify their options. Given the various issues of raising resources easily from the banking sector for SMEs, N A Charantimath, a highly regarded chartered accountant, urged SMEs to look at instruments such as factoring, leasing and securitising among others.
Delivering a talk on ‘Bank Funding: Challenges and Opportunities’ organized jointly by Business Standard and Karnataka Chamber of Commerce and Industries (KCCI), Hubbali, Charantimath regretted that banks were not forthcoming enough to support a vital sector.
"Innovative funding options like private equity are available. Putting the blame always on the banking sector is not a healthy trend," Charantimath said. He however maintained that the banking sector should take more active steps to support SMEs.
He pointed out that SMEs contributed 40 per cent to industrial production and 17 per cent to the GDP. Lack of funding has been a major constraint, he said, and added that only 12 per cent of the SMEs’ funds came from the banks. Reduction in cash margin, collateral security, credit rating, lack of communication and competition from large enterprises and imports were the major problems faced by SMEs in availing funds from banks, Charantimath asserted.
Speaking at the same event, Rama Naik, General Manager of Karnataka Vikas Grameena Bank, said the banks were relying on three Cs - Capital, Capacity and Character of the borrower - while lending funds. Admitting that bank managers were wary of the risk factor, Naik said the banks should look at the opportunities instead and weigh the merit of the proposal rather than harping on the risk factor.
KCCI President, Vasant Ladawa was critical of the banks’ attitude towards SMEs. He said that banks were not following guidelines issued by the Reserve Bank of India on funding MSMEs. The RBI guidelines stipulate that 60 per cent of a bank’s lending should be to MSMEs, but it stands at 13-17 per cent. He also pointed out that the risk factor was minimum in funding MSMEs as the MSME’s NPA ratio was just 0.32 per cent.