MSME: HDFC Bank’s MSME book rises 30% to pass Rs 2 trillion mark
In December 2019, the bank’s MSME pound stood at Rs 1.4 lakh crore, which rose over 60,000 crore or 30 percent to Rs 2,01,758 crore in the December 2020 quarter, giving it a 10.6 percent share of MSME system-wide loans. , becoming the second lender in this segment after the State Bank of India, the bank added.
“Our loans to MSMEs are back to pre-pandemic levels, with a loan portfolio increasing 30% year-on-year to Rs 2,01,758 crore in the December 2020 quarter,” Sumant Rampal, Senior Executive Vice President , business banking and health care. finance, at the bank said Friday.
“While the ECLG program has been the main driver of increasing the Rs 23,000 crore loan portfolio to approximately 1,10,000 MSME clients, our own renewed push towards clients in semi-urban and rural areas has helped us. also helped during the pandemic, leading to a gradual growth in loans of over Rs 60,000 crore, ”he said, adding that most of the ECLGS disbursements had only taken place over the years. last three or four months.
With loan growth of 30%, the MSME portfolio is the fastest growing vertical sector for the bank. “This is a testament to our commitment to strengthen the MSME sector which accounts for around 30 percent of GDP and the largest employer,” Rampal said.
The government launched the third version of the Rs 3-lakh crore Emergency Line of Credit Guarantee (ECLGS) program for MSMEs last November, following the KV Kamath committee report.
Union MSME Minister Nitin Gadkari told Lok Sabha on Thursday that banks and other financial institutions have cumulatively sanctioned Rs 2.46 lakh crore of the Rs 3 lakh crore regime, while disbursements s ‘amounted to Rs 1.81 lakh crore, as of February 28, according to data from the National Credit Guarantee Trustee Company, which is the executing agency of ECGLS.
The program has a 2 percent interest subsidy and lasts for five years, the first year of which benefits from a payment moratorium.
“Our MSME portfolio is geographically balanced and spread across all metropolitan cities, urban, semi-urban and rural areas. And we reached out to them with a suite of personalized products that they could easily access through physical or electronic channels,” Rampal said.
The bank offers a range of services to MSMEs, ranging from conventional working capital / term loans, structured finance and cash management solutions, trade finance solutions, foreign exchange services, individual banking needs of promoters and family, salary accounts and investment banking advice.
Its MSME portfolio is spread across sectors such as textiles, manufacturing, agribusiness, chemicals, consumer goods, hotels and restaurants, automotive components, pharmaceuticals and paper industry, and also includes l whole sales chain ranging from wholesalers, retailers, distributors, stockists. and supermarkets, he said.
In the fourth quarter, Rampal declined to share figures citing the Nasdaq period of silence, simply saying my team was busy at work and pointed to the large market of 6 million registered MSMEs, but only 1.2 crore of them. they borrowing even after all the push from the government and the Reserve Bank.
He said that of their 5,500 branches, 1,800 of them make more than 25% of their loans to MSMEs and 4,800 units serve this segment of customers. Geographically speaking, the bank is present in 630 municipalities, of which 560 have MSMEs.
There are no worries on the asset quality front for the bank, which is used to having the lowest NPAs in the system. As of December 2019, the MSME bad debts for the bank were only 0.48% and Rampal said that the whole ECLGS book is currently under mandatory moratorium anyway.
He said the service sector still faces challenges and expressed apprehension in the face of the second wave of the pandemic.