Cooperative banks need to change policies for MSME lending, says Maharashtra State Cooperative Bank chairman
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Pune: Maharashtra State Cooperative Bank's chairman Vidyadhar Anaskar has said that cooperative banks need to change their decision-making process while issuing loans to micro, small and medium enterprises.
The lenders should change their approach to project-based finance instead of focusing on security collateral, he said on Sunday. "Many banks insist on a personal property collateral while issuing loans. This is not the intent of MSME financing."
He was speaking at 'Banking and MSME Sector Conclave 2025' organised in Pune by Sahakar Bharati and Global Indian Origin Network.
Dinesh Gandhi, chairman of Sahakar Bharati, said MSMEs support close to 11 crore families, making the sector one of the most important employers in the country.
Speaking on lending to the real estate sector, Anaskar said the housing segment is very lucrative for cooperative banks as such loans provide better returns and assurance of repayment based on the goodwill of developers who follow good practices.
Additionally, the property offers strong collateral while issuing loans, the MSCB chairman said. "However, there are limitations for banks in commercial real estate lending as it is not classified as a priority sector by the Reserve Bank of India."
The reason is that the real estate sector receives dual financing in the form of the money they get from buyers during various stages of construction and also the loan taken from banks, he pointed out. Anaskar also sought a constructive approach from auditors and accountant consultants to expedite project finance.
A lot of first-generation entrepreneurs start their businesses in the form of micro and small enterprises, Indraneel Chitale, managing partner of Chitale Bandhu Mithaiwale, said at the event. However, he raised a concern that these business owners are stuck in the paperwork while taking loans from banks, and lenders should work towards reducing the red tape so that they can concentrate on developing their businesses.
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