Rituparna Kakati | 03 Aug, 2018
In an exclusive e-mail interview with
SME Times, Narayanan P P,
President, MSME & Transaction Banking, Lakshmi Vilas Bank, said
that last mile credit
delivery to the Indian micro, small and medium enterprises (MSMEs) is
gathering momentum in recent days.
Please share your views on the recent development of Lakshmi Vilas
Bank in Retail and MSME sector.
Narayanan P P: LVB is a 91 year old bank and has its presence mostly in the South
of India. South India has always been a favorable region for MSME
space for all banks. The Bank has always tried to offer suitable
solutions to its cohort of MSME customers. The last 2 years has been
quite eventful for the business and the effects of demonetization,
GST implementation and RERA had affected the customers as well as the
Bank’s business. Nonetheless, the bank has endeavored to support
its customers through various dispensation on account of policy
changes as per the Regulator’s guidelines. Further, the subvention
schemes that the Government has tried to devolve through the banking
systems have also been adopted such as in Gold Loan schemes, etc.
Also, in retail segment, though in its nascent stage, the Bank has
focused on loan against property, mortgage and gold loans and this
has held the bank in good stead.
Regarding industries, the Bank has been able to support MFI-NBFCs,
Agro processing, Commercial Vehicles, Textile, Engineering and
Manufacturing to name a few.
With the current developments, the Bank has also believes that it
is necessary to service the customer through the entire life cycle,
and hence it is but natural to offer BSBDA accounts, cash credit,
term loans, LC, SODD, etc.
Also, for the last mile connectivity, the Bank has begun to
establish business correspondents wherein the bank branches are not
located and it is with strategic partnerships that we intend to
achieve growth in other geographies in India.
What are the exclusive products you offer to the MSME sector?
Narayanan P P: As mentioned above, the Bank offers all types of Business credit,
SODD, bill discounting and jewel loans. Today, the Bank believes in
servicing the customer with a suite of offerings and that includes
not only asset based products but also liabilities in terms of OD
facility, loan against deposits, dynamic current flexi accounts and
forex to name a few. Over time, the Bank envisages that the customers
shall migrate to its digital platform and each customer can have a
ready to attend chat bot enabled or customer service relationship
manager who can service the customer with not only traditional but
Digital technology has changed the present day banking scenario.
What initiatives LVB has taken in this direction?
Narayanan P P: The journey of the Bank has been an interesting one. Just like
other banks, LVB believes in an omni-channel strategy and anticipates
that in near future, literally all basic transactions shall migrate
into its digital platform. LVB current has around 30-40% of its
transactions online. LVB is in the process of launching its latest
core banking system of Oracle and along with the same, it is enabling
the entire India stack. The Bank believes that in our offerings of
investment solutions through app based services have been a good
success and slowly but surely, this is becoming a major revenue
earner and enabling sticky relationships for the bank
Our mobile banking facility is also up and the major challenge
here is to integrate a seamless API based platform that shall offer
huge economies of scope for the bank in terms of payments, merchant
acquisitions, investment solutions, etc.
Further, the Bank is launching is suite of cards (prepaid, gift
cards, credit cards against fixed deposits) that shall also enable
the customer to transact effortlessly.
Can you please share your views on disbursal to the MSME sector by
Narayanan P P: It has been interesting in seeing the translational and transactional
gearing in the economy post the effects of GST and demonetization.
True to the IIP nos. as report by the industry, the Bank has also
seen upsurge in the credit uptake in the MSME sector. Post the
revised classification of MSME as per the regulator/government, the
Bank believes it will also help in pricing issues. In today’s
context, the SME customer requires service and that too with a razor
sharp TAT. The Bank is in course of providing all the enablers in
this financial year. Further, the Bank has looked to diversify its
disbursals across various industries. Commercial Vehicles, Personal
Gold Loan, Agri based gold loan, Loan against property and working
capital loans have seen a major uptake. Last mile credit delivery
through MUDRA loans and other loans to Micro and Small Industries is
gathering momentum in the recent days. The ten new Small Finance
Banks are also expected to play a major role in disbursing MSME
The banking sector is currently somewhat jittery due to scandals
and strict action taken against some bankers? Can this affect Indian
Narayanan P P: Banking industry of India has seen many upturns and downturns. In
my experience, I believe that there are several issues that have led
to certain events in the Banking Industry. Of course, in the race for
short term incentives, there is always a pressure to grow and in this
there are certain compromises, either knowingly or unknowingly
undertaken by market participants. You may note that the term “GRC”
i.e., Governance, Risk and Compliance is nowadays used more often in
the financial sector than earlier. These 3 pillars have to be given
Nonetheless, the Banking Industry in India and endured in recent
times. In the short run, it has been discouraged a lot. Policy
changes have also taken time but what gives me comfort is that the
economy, in its worst of times has still grown. The Rural economy is
good example for this. Perhaps, Banks have to pivot and have to learn
from its NBFC’s counterparts who have established that an
operational intensive model, if executed properly is also a big
winner. With the advent of technology and digital credit, credit
bureau robustness enhancement, block chain, it is expected that
transparency and prudence will prevail and the Banking Industry of
India will emerge from this and reposition itself once again as an
important player in the growth story of India.
When do you expect the NPA problem of the Indian banking sector to
Narayanan P P: Although it is tough to reply about the exact timelines, my
understanding is that in the next 7 quarters, most of the banks will
emerge out of this problem and stabilize. Of course, various
mechanisms are in play and the trajectory is subject to those aspects
playing out as well.