He noted that tackling the challenges faced by MSMEs like high interest rates requires a detailed and integrated approach by the financial sector so that the financial needs of the sector can be addressed more efficiently.
During the last decade, SME listings have generated Rs. 14,000 crore has been raised and in the last financial year Rs. 6,000 crore was raised, he said, adding that funds raised through IPOs have grown 12-fold in the last five years.
However, he added that “a word of caution on SME listings would not, of course, be out of place”.
In recent years, the list of MSME platforms has increased, he said.
There is a lot of growth, and we are growing very fast, he said, adding that “if you try to take shortcuts, try to increase the balance sheet, I think the relationship between intermediaries and companies will be very short”.
After the US and China, the startup eco-system in India is expected to witness a sustained annual growth rate of 12-15 percent, Bhatia said, adding that India now has five decacorns, with a combined valuation of over 110 unicorns. Over USD 350 billion.
“We would welcome these listings on the exchanges,” he said.
Stating that there are no checks and balances in SME listings and no one saying no to SME clients, Bhatia said the market ecosystem needs to say no when it is necessary for SME listings.
“Nobody actually says no. I am a banker, and we were taught to say no when needed,” he said, adding that due diligence is lacking from merchant bankers, chartered accountants and exchanges.
“Be a good doctor to these companies. Don’t give them steroids when they can survive on paracetamol,” Bhatia said.
According to him, new opportunities for credit access are emerging with the advent of data analytics and financial institutions and fintech companies can partner to deliver data-centric solutions for MSMEs.
Digital revolution and government policies are crucial to improve access to finance for MSMEs, he added.
Currently, 600 SME companies are listed on both exchanges, with a market capitalization of Rs. More than 2 lakh crores.
He said that alternative sources of funding like crowdfunding and venture capitalists are available for MSMEs. They may consider alternative funding routes like angel or venture funds before going for an IPO.
Atesh Singh, Joint Secretary, Ministry of Micro, Small and Medium Enterprises (MSME) said that finance and technology have emerged as twin engines to provide timely and affordable credit to MSMEs, which will help unlock the true potential of the sector.
The credit gap in the sector is a key issue that needs to be analyzed through a cluster approach, along with the creation of new risk assessment models.
Rajneesh Kumar, Chairman, MasterCard India, said that changes brought about by the adoption of technology and the availability of new and larger sources of data have significantly improved the ability of financial institutions to predict defaults through improved assessment of borrowers. Intention to Pay’ and ‘Ability to Pay’ metrics.
(You can now subscribe to our ETMarkets WhatsApp channel)
