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India wants to re-examine the architecture of the financial sector to revive the Covid pandemic-hit micro, small and medium enterprises, mentioned Pronab Sen, economist and former Chief Statistician of India.
Delivering a lecture on “Build Back Better – the Role of Finance” on the event of Bandhan Bank’s seventh anniversary, Sen mentioned that India would have to build the MSME sector again. “Let’s build it higher than what it used to be”, he mentioned. “While the company sector was performing strongly, the non-corporate sector was not – in truth, it was broken”, Sen added.
In the current previous, the harm that has been achieved to the MSME sector within the nation, a big a part of the market share moved into the fingers of company India which led to vital improve within the pricing energy of the corporates, Sen identified.
“The kind of competition they were getting at local levels from the non-corporate entities is no longer there. So, the ability to pass on cost increases to the consumer has become very much easier today than it was previously. And that’s not going to get better unless the MSME sector comes back.”
At the guts of constructing the MSMEs higher, Sen mentioned, will not be fiscal intervention, however the best way the financial sector is structured. The banks had been keen to lend to among the MSMEs, however not to the overwhelming majority. “This was a problem even earlier but earlier we had the NBFCs which came and filled in that particular gap. Today, the NBFCs are just as much in trouble as the MSMEs,” mentioned Sen.
According to Sen, the connection between a financial institution and NBFC wants to be not of a borrower and a lender as it’s immediately, however that of a associate.
“If we need to wish to build back better, we will need to re-examine the architecture of our financial sector. Otherwise our worst case scenario is our MSME sector will never revive and the best sector scenario is we will go back to where we were which was sub-optimal”, mentioned Sen.
Bandhan Bank
Addressing the gathering, Chandra Shekhar Ghosh, Founder, MD and CEO, Bandhan Bank, mentioned that Bandhan Bank was an affect organisation.
“When we transformed into a Bank in 2015, we were roughly 13,000 employees. Today, we are nearly 5 times that number, at more than 63,000 employees. This is the direct impact that we have been able to create. We have more than 1.80 crore microcredit customers,” mentioned Ghosh.
Assuming that every of those microcredit clients have employed only one extra particular person – Bandhan Bank has been ready to not directly create 1 crore 80 lakh employment alternatives, he added. But 7 years again, when Bandhan turned a common financial institution, its whole advance ebook was simply microcredit.
“Today, the share of microcredit has come down to 44 per cent. The remaining 56 per cent of our advance book are non-microfinance loans covering a wide range of advances to suit the needs of every Indian,” mentioned Ghosh.
But Bandhan is aiming to scale up additional and sooner. “In this financial year itself, we will open 551 banking outlets to take the total to more than 6,000. Majority of these will be outside of the East of India, where we are already very strong in penetration,” mentioned Ghosh.
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