Why MSME Bank is a Bad Idea: Better Banking over More Banks
The idea to establish an MSME-focused bank in India seeks to address the long-standing credit gap faced by nano, micro, small, and medium enterprises. While the idea has merit, it also presents significant challenges, including operational complexities and potential overlaps. Piyush Singh explains why a dedicated MSME bank is not the right path
Unlocking India’s Credit Potential: A Comparative Look at OCEN and ULI
Open Credit Enablement Network (OCEN) and the Unified Lending Interface (ULI) are designed to transform the lending landscape by making credit more accessible and streamlined for underserved segments. But how do they differ, and what unique roles do they play in enhancing India’s digital credit ecosystem?
SME Lending Channel Strategy: Key Success Factors
Lenders—Banks, NBFCs, or FinTechs—face the classic ‘Knapsack Problem’ while trying to create an optimal SME lending distribution structure. Each channel mix—branches, digital, phygital, own, agents, co-lending—brings its own costs and benefits, with varying considerations of scale, risk appetite, resources, and practicality specific to each lender. These essential considerations can help bring clarity to your distribution strategy.
Assessing Borrower Liquidity: The Monsters Hide in the Details
For lenders, the Current Ratio is the staple measure of a borrower’s liquidity position. A good ratio shows that the inflows in the short term will easily take care of expected outflows, such as creditor payments. However, this is only a superficial analysis. The real story lies beneath the surface, where surprises may be lurking.
Liquidity Assessment for Credit Risk
Even after we have taken due care of matching correctly graded current assets to current liabilities, the business eventualities, customer behaviour and business exigencies may still bring new challenges. How does a lender factor in these potential risks on company’s liquidity?
In Part 2 of the #LiquidityAssessment series, Amit Balooni explains the concept of #NetWorkingCapital and the caution that a Credit Analyst needs to take.
Liquidity Assessment for Credit Risk
Liquidity assessment using Current Ratio is a powerful tool and a staple for credit risk analysts . But it has its limitations. In this three part series, Amit Balooni shares his perspectives and how to fine tune liquidity assessment for credit risk
Will it remain a lender’s market for long!
Market is rejoicing that credit growth is back. But it was not the doing of the banks. Instead it seems to be lender’s market with long wait for credit approvals and straight jacketed approach followed by banks. But times can change to Borrower’s market very soon. Sumit Kakkar shares his perspectives
Navigating SME Lending Strategy: Two key pointers
‘What is an SME?’ has no all-encompassing answer. Any standardised approach to building SME Lending strategy is therefore fraught with risks. We deep dive into two important factors that can be guiding lights- variance in SME definitions and the role legal ecosystem plays. Amit Balooni shares the pointers
SME Financing – Opportunity for Alternate Channels
MSMEs seem to be showing the expected resilience and regaining market’s interest. Sumit Kakkar explains some of the constraints faced by MSMEs and how resolving these presents a big opportunity for Alternate lending channels
Critical Thinking in Credit Risk: Avoid these Fallacies
Critical Thinking concepts can help build a robust credit risk culture that relies on logic and objectivity and minimises biases. Amit Balooni shares his perspective on how common fallacies may lead to selective data being used for credit decisioning