HDFC Bank sees a 30 percent growth in its MSME book

Through the ECLG scheme, the bank has disbursed $USD 31. 79bn and is witnessing a 30 percent year-on-year growth in its MSME book.

March 19, 2021

The bank has crossed the $USD 27.64bn mark as of December 2020 with a 30 per cent growth annually.

Sumant Rampal, senior executive vice-president mentioned that the bank’s MSME lending was back to the pre-pandemic levels.

He also attributed the growth to the bank’s renewed push towards customers in semi-urban and rural areas.

The MSME book is the fastest growing vertical in the bank, at a 30 per cent loan growth.

HDFC Bank’s MSME book has grown 30 percent annually to cross the $USD 27.64bn mark as of December 2020, elevated primarily by the ECLG scheme through which it expended $USD 31. 79bn. Sumant Rampal, senior executive vice-president, business banking and healthcare finance, mentioned that the bank’s MSME lending was back to pre-pandemic levels, with the loan book growing at 30 per cent year-on to $USD 27.6bn as of the December 2020 quarter. He added that apart from the ECLG scheme being the major boost of the loan book, the bank’s renewed push towards customers in semi-urban and rural areas lead to an incremental loan growth of over $USD 1.38mn. He also revealed that most of the ECLGS disbursals took place across the past three-four months.

From conventional working capital/term loans, structured cash flow management and financing solutions, trade financing solutions, forex services to individual banking needs of promoters and their families, along with salary accounts and advisory on investment banking, the bank offers an assortment of services to MSMEs. Rampal spoke of the geographical proliferation of the bank’s MSME portfolio, from metropolitan cities to rural regions, across a myriad of sectors such as textiles, agriculture, consumer goods, automobile and pharma, and included the entire chain of sellers. The MSME book is the fastest-growing vertical for the bank, at a 30 per cent loan growth, which, Rampal believes, is a testimony to the commitment of the bank to strengthen the MSME sector that accounts for about 30 percent of the GDP and is among the largest sources of employment in the country.

Following the KV Kamath committee report, the third version of the $USD 41.39bn ECLGS (Emergency Credit Line Guarantee Scheme) was launched by the government in November 2020 for MSMEs. Union MSME minister Shri. Nitin Gadkari had earlier mentioned that banks and other financial institutions have collectively sanctioned $USD 33.94bn of the $USD41.39bn scheme, with the expenditure remaining low at $USD 24.97bn, as of the 28th of February 2021, as per the information taken from the National Credit Guarantee Trustee Company, the implementing agency of the ECLGS. The scheme is a five-year tenor with the first year getting a payment moratorium and comes with a grant of a 2 percent interest.