Webinar On Ways To Approach Lenders & Getting Fund For Projects
June 16, 2020
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WebinarSessionResurgentIndiaCOVID-19BankFundIndianBank FinanceBankingLendersProjects
RESURGENT INDIA KNOWLEDGE SERIES PRESENTS
Webinar on Ways to Approach Lenders & Getting Fund for projects
Speakers- Mr. Kishore Kharat, Ex-MD &CEO- Indian Bank & IDBI
Speakers- Mr. Rajeev Puri, CGM- Punjab National Bank
Moderated By- Mr. K.K Gupta, Director-Resurgent India Limited
Premise
- Overview of the bankers
- The approach of bankers towards lending in recent times.
Key Takeaways
General Overview
- The impact of COVID-19 is in two ways-operational and financial.
- The economy is supported by four pillars- Government, Regulators(RBI, SEBI, CREDAI, etc) are policymakers and direct the economy. The banking & finance industry, & capital markets are the other two active pillars.
- Since independence, the banking industry has been instrumental in shaping the infrastructure of the economy. 80% of the entrepreneurs can be said to be dependent on the banking industry for the range of financial assistance provided by them. Unlike the banking and finance industry, capital markets only help a certain class of people.
- The market is flooded with ample liquidity. Liquidity created because of a 1% reduction in CRR together with funds parked under reverse repo rate by the banks, sufficient liquidity can be floated in the market.
- An increase in risk capital is required. Perhaps, banks have little room for expansion relative to the magnitude of credit growth required because of little risk capital available with the bank.
- Banks will be in a better position to lend all the available liquidity parked with RBI, once the GoI increases the capital. This will help revive the business and economy.
- An increase in lending will be beneficial for banks as well it will help create quality assets which will eventually create reduced stress in the market and thereby accounts for turning NPA.
- RBI perhaps should look into relaxing the current norms for asset classification and down gradation of the accounts.
- It is just as important to realize that it is not wise to hold everyone accountable for incorrect bets on certain accounts. It is a normal trend for 10/100 lending decisions to land incorrectly. It is important to empower ground officers enough to take calculated risks.
- Sustainability of the borrowed funds will have to be worked out by entrepreneurs and repayment can be structured flexibly depending upon the confidence of the borrowers to revive.
- Banks can also rework the working capital limit. Subsequently, any problem with DP can be worked out in a manner where some portion of the working capital is turned into a working capital term loan with a moratorium.
- Banks consider funding start-up companies whose initial years of balance sheet show negative cash flows or profitability provided that the promoter is able to convince the lender of its deservability.
- If entrepreneurs can convince the bankers of their business model, banks have discretionary powers to lend over and above their limit.
- Banks can operate the business on the old methods of banking, provisioning, risk management, etc. These processes will have to be reviewed and restated for the sake of the time the economy is going through.
- Consider bankers as your financial advisors and portray a transparent picture of the business, which will help the bankers to take corrective measures and provide the necessary solutions to business’ financial needs.
►Watch the webinar here: https://www.youtube.com/watch?v=O0uTooDVvqc
