Banks will have to be a lot more friendly while serving customers, says FM

Union Minister Nirmala Sitharaman on Monday said banks have to be more customer friendly especially in engaging and serving them. Banks can do this without taking undue risks.

Responding to a query on hassle-free loans to startups, the Finance Minister said that the Prime Minister Narendra Modi has always maintained that 'I am the security behind you, please take loans, you don't need to give security'.

“This is the thinking behind MUDRA and SVANIDHI schemes; and the performance in servicing loans has been very good,” She said during an post-budget (FY-23) interaction with stakeholders from industry, large taxpayers and professionals in Mumbai today.

Dinesh Khara, chairman, State Bank of India said very often startups need equity. As far as loans aare concerned, banks are more than happy to support provided they have enough equity. The use of credit guarantee schemes is being encouraged.

Banks are making end-to-end processing (filing application to decision making) digital to address concerns about hassles in financing. This will make life much more-easier, Khara said.

Revenue Secretary Tarun Bajaj noted that balance sheets of both banks and the corporate sector have started looking up. The government will like the growth rate to be high enough in the coming years so that it can help the economy.

SBI needs to work out some system to push credit into the economy, take leadership and address concerns of MSMEs and large businesses too, Bajaj said.

SBI chairman responded saying the under-utilisation of working capital limits have come down by nine per cent in the quarter (Q3Fy22) and still at that level also under-utilisation is as high as 52 per cent.

When it comes to SMEs, the best way out is to have a credible cash-flow and if banks have access to it, lending becomes very easy.

Several issues on the economy and various sector-specific issues came up for discussion during the interaction with industry, including on strengthening the Production Linked Incentive Schemes for encouraging investment and domestic manufacturing.