Mergers of Public Sector Banks: Will the MSME be victim to a ‘middle class’ treatment?

Mergers of Public Sector Banks: Will the MSME be victim to a ‘middle class’ treatment?

May 10, 2019 Admin 5
MSMEMergers of Public Sector BanksPublic Sector BanksBankingNPANPA Management

India has been a breeding ground of a thriving, if not blooming MSME sector. Most startups fall under this category as well. Organizations in this sector fill in the gap between large corporate entities and small scale industries. Statistically speaking, the MSME sector contributes to 45% of the total exports in the country. This includes a steady growth rate of over 10% year on year. Needless to say, the implication would be heavy dependence on the MSME for a major chunk of employment for the masses.

Mergers of Public Sector Banks: Will the MSME be victim to a ‘middle class’ treatment?

Smaller banks have been favorable towards financing the MSMEs. Almost 20% of this sector lies in the rural region and contributes towards various sectors. With the merger of a ‘strong’ bank with two ‘weak’ banks, there would be a shift in paradigm. More emphasis shall be laid towards putting in the funds towards global, established and relatively larger entities. Wherein the risk would be reduced tending towards NPAs. However, this comes with its own limitations. With investments tending towards the global scenarios, global economic meltdowns could be adversely affect the bank. This would perhaps increase the vulnerability of the tax-payers’ money. Increasing provisions for NPAs is another deterring factor for MSMEs.

 

However, all is not lost in this case. The government is working towards the upliftment of this sector and has ensured multiple schemes towards ensuring a steady growth (PMKVY being one of these). Today, we yearn to be a super-power and gone are the days that India was deemed as a third-world nation. Equipped with dynamic decision making abilities, the Govt has ensured to equip MSMEs with adequacy of funds in order to grow. After being plagued by multi-million dollar scams, the PSU banking scenario is experiencing a positive change. We are looking towards enhanced decision making. Albeit, the rays of hope shall touch upon the MSMEs and not hinder its growth.


We, at Resurgent India are dedicated towards providing your business with the best fit loans with nominal interest rates. Contact us at corporate@resurgentindia.com to avail assistance in case of any fund raising.

 

Mr. Jyoti Prakash Gadia

MD - Resurgent India Ltd.

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