SME Times News Bureau | 15 Mar, 2019
In an
exclusive interview with SME Times, Satya MicroCapital CEO & MD Vivek Tiwari said that Indian banks should be encouraged to
give collateral free loans to small and medium enterprises (SMEs).
Excerpts of the interview …
Please tell
our readers about Satya MicroCapital and its entrepreneurial journey?
Vivek Tiwari: SATYA started its microfinance
operation from Sikandrabad Branch, Bulandshar District of Uttar Pradesh and the
first token disbursement was done in November 2016. SATYA utilized
demonetization as an opportunity to rework on the business strategy through
cashless transactions.
We have adopted the “LLG (LIMITED LIABILITY GROUP)” with adequate use
of technology and new adaptations. JLGs of SATYA means implementations of Joint
Liability of group members which exists up to 10 instalments in Bi-Weekly
collections. The Company believes in the ideology to bring social touch and
high technology in the Indian microfinance industry. The JLG lending operation
mainly focuses on a woman (in case of SATYA, her husband acts as co-borrower)
through a credit product that allows her to start a new business or enhance her
existing business as well. SATYA provides prompt, convenient and affordable
collateral-free credit to people at the bottom of the pyramid through a strong
credit assessment and centralized approval.
What are the
services you offer? Are they good for SMEs?
Vivek Tiwari: We offer loans/ financial support under
3 models:
- Joint Lending Model (Can be availed
only by women entrepreneurs
- Individual Lending Models (Personal
loans that can be availed by all)
- Consumer Durable Loan (can be availed
by both females and males)
Yes, We act as a catalyst for industry
and SME growth.
Microfinance is a financial resource
for low-income individuals and small medium enterprises for supplying loans,
savings and other financial services to under-privileged people.
Access to finance is the major problem
faced by micro-enterprises, to whom commercial banks have traditionally
concentrated their lending mainly to large formal enterprises which have the
expertise of doing business and possess collateral. They miss out small
enterprises as they lack expertise and riskier investment. Thus it is observed
lack of proper access to finance as one of the factors hindering the SMEs
growth. So to facilitate financing the policies of microfinance institutions
have been framed.
Microfinance institution emerged as a
noble substitute for informal credit and an effective instrument for providing
funds, financial help for the growth of SME’s. Easy accessibility of services
offered by microfinance institutions has a direct impact on the sales, profit
and physical assets development of SME’s.
What
upper-hand NBFCs are enjoying over traditional banking?
Vivek Tiwari:
· Complete Process Automation using
Advanced Technology and Mapping all processes and capturing the information
required to build control mechanisms:
· Complete Data Digitization for Complete
Business Process Better Quality Client Acquisition
· Micro entrepreneur Loans
· Dedupe Check of Client
· Integrated Online Credit Bureau
Check
· Online Real-time Integrated Credit
Bureau Check
· Satya’s Maukhik Song
· Meeting-in-Charge Rotational Model for
Sharing of Responsibility
· Strong Democratic behavior of the group
· Strong Multi-layered Credit Appraisal
Process
· 100% Cashless Disbursement
· Distribution of Floor Mat for Centre
Meetings
· Cashless Collection
· Sharing Information with Clients based
on the Specific Event using Mobile SMS Services
· Launch of Interactive Voice Response
(IVR)
To what
extent it is true that Indian NBFC sector is facing lack of funds these days?
Vivek Tiwari: India has been witnessing a huge surge
in consumer leverage in recent years and these non-bank intermediaries have
been growing this lending faster than banks.
Some fund houses may have started
cutting bond holdings, particularly from NBFCs, and are seeking to sit on cash,
because of market uncertainty and apprehending a possible surge in redemptions,
But the financial performance of NBFCs, including profitability, asset quality
and capital adequacy has improved during 2017-18 as they weathered the
transient effects of demonetization and GST implementation.
What
suggestions do you offer to reform the banking sector so that it can better
serve credit needs of SMEs?
Vivek Tiwari: Nearly all banks prefer to lend to
MSMEs only against collateral. Current trend is that majority of lending to
MSME sector is against property mortgaged by promoters or owners or partners of
MSME unit to the bank. A significantly large chunk of MSME loans between Rs. 30
million to Rs 150 million are actually nothing but Loan Against Property (LAP).
This trend is actually because of the risk framework adopted by Banks to build
secured loan book which leads them to lend only against collateral.
Banks should be encouraged to offer
collateral free loans, wherein Credit Guarantee Fund Trust Scheme for Micro and
Small Industries (CGTMSE) offers credit guarantee cover offers to Member
Lending Institutions (MLIs), up to 75% of amount of default. This is a boon for
micro units and start-ups, who can raise initial funding for capex without
having to worry about collateral.
What is your
about your view on the Interim Budget as far as MSMEs, Indian industry and NBFC
sector are concerned.
Vivek Tiwari: MUDRA Yojana has done a commendable work in providing
credit to relatively smaller and aspiring entrepreneurs in India. We understand
that the welfare schemes cannot be completely avoided as this is an election
year, while the government also needs to stick to its Fiscal Deficit targets.
So, the capacity of MUDRA couldn't be increased as was being anticipated by the
industry. However, it is the need of the hour to generate employment and
provide a favorable atmosphere to the MSME sector. We hope that this area,
alongside the implementation, will be looked into when the government announces
its full budget later this year.
Please tell
us about future plans of Satya MicroCapital.
Vivek Tiwari: We want to open our branches in all the states
where we don’t have existence till date majorly embarking our presence in the
Southern part of country.