As the economy develops credit intensity would probably increase initially, calls Shyam Maheshwari SSG

Shyam Maheshwari SSG describes the Indian credit market and how it is dominated by private lenders. The Indian credit market has been dominated by banks and non-bank financial companies for a long period. It started with the primary dominance of PSU banks then the private sector banks came along.  Still, the credit to GDP ratio is relatively modest and low for the stage of growth of the country.  As the economy develops credit intensity would probably increase initially and the need for credit is very much out there. The challenges the banks and non-banks as you have rightly pointed out may not be able to fulfil that requirement and that’s where the private credit demand is extremely apparent and necessary for the growth, says Shyam Maheshwari.

Shyam Maheshwari thinks that taking what he said on the flexibility, also emanates from the regulated players which have been dominating the market for a long time whether it is a bank or a non-bank. One is regulated second is leveraged. The leverage platforms have certain constraints which were shown when IFS has happened in terms of whether it is LLM or it is provisioning norms. Flexibility is available in terms of speed. Flexibility is also available in terms of crafting a solution which is meeting the need of the borrower then. It could be for capital formation, which is quite a constraint in terms of financing from the traditional sector in India.  

Shyam Maheshwari SSG serves as Chief Executive Officer, Founder and Partner of SSG Capital Management (Singapore) Limited

The third is real estate, fourth is intangibles, according to Shyam Maheswari.  Lots of these are also sectors that are kind of at the building block of the country especially real estate which does not get adequate attention from the banking sector.  So, coming to the ground exactly what you would expect certain sectors have more need but it seems like the need has grown rapidly at least in terms of number enquiries.

Primarily because of constraints especially at this point where the banking sector is running double-digit MPL ratios. There had been certain comfort for the investors from the global perspective which is there is an IBC process in place. There is creditor protection which is increasing and improving over time. Of course, the access to the market remains open, improving but still, a lot could be done as also he pointed out in form of access which is only available to the foreign participant in form of either and ECB in dollar terms or in rupee bond market which has certain nuances and constraints at this point.  However, still, it is pretty encouraging to see the signs that it has been opening up in the last decade or so.