Bank Funding - Opportunities and Challenges

From left to right: Mr. Deepak Chabbria, Vice President, Sindhi Chamber of Commerce, Mr. Hasmukhlal D Vora, President, Hindustan Chamber of Commerce, Dr. N Kamakodi, MD &CEO, City Union Bank, Mr. B Rajkumar, Executive Director, Indian Bank, Mr. Rajalal Nichani, President, Sindhi Chamber of Commerce, Mr. K Suresh, Chairman, Expert Committee on Banking & Finance, HCC, at Business Standard Smart Business in Chennai on 5th July 2014, in association with Hindustan Chamber of Commerce and Sindhi Chamber of Commerce.

“The key for SME sector to access banking finance without any problems are the 4 C’s- Cash flow, Capital, Collateral and Character”, said N Kamakodi, Managing Director and CEO of City Union Bank, while addressing Business Standard Smart Business titled 'Bank Funding – Opportunities and Challenges'. He also added, “Banks are true to their heart and that banks want to support this sector”.

He noted that CUB's 75 percent of the credit comes from SME and agricultural sectors. Most of the Banks founders' vision is to support the local businessmen and entrepreneurs.

While agreeing that there is a communication gap between the business community and the bankers and getting loan is not an easy task, Kamakodi said, “If the track record (of the entrepreneur) is good, it solves 50 percent of the problem”.

B Rajkumar, Executive Director, Indian Bank, said, “SME sector is the oxygen for industrial sector and growth engine for the country. Without this sector, Banks cannot grow”.

He said that this sector is attractive for the Banks considering the returns are high and risk is low, unlike corporate sector. “Default is less in MSME sector, NPAs are less compared to corporate sector”. Rajkumar also echoed Kamakodi's view that diversion of money, by the customer, is one of the biggest challenges which is the first starting point to NPA”. “The entrepreneur should be working smart, rather than working hard”, he said.

The Banks should also play an advisory role. Hasmukhlal D. Vora, President, HCC, highlighted issues faced by the SME sector.

Rajalal Nichani, President, Sindhi Chamber of Commerce, also echoed the view adding that if the manufacturing sector and the GDP need to grow, SME sector must grow too. He stressed on the need to lend more funds to the SME sector.

K Suresh, Chairman, Expert Committee on Banking & Finance, HCC, said that one should have a balanced picture, considering the fact that Bankers also have a few constrains and challenges. “Banks are also business entities and it is not an easy task for Banks considering they have limitations and constrains,” he said.

Deepak Chabbria, Vice President, Sindhi Chamber of Commerce, proposed the vote of thanks.