In Conversation With TT Srinivasaraghvan, MD, Sundaram Finance
Our correspondent Rajat Mishra interviewed TT. Srinivasaraghvan, MD, Sundaram Finance about the crisis NBFCs are reeling under and how announcements made in budget are going to affect the NBFCs.
#NBFC #Budget2019 #TTSrinivasaraghvan #Money #OutlookMoney #OutlookMagazine #OutlookGroup #Interview
#NBFC #Budget2019 #TTSrinivasaraghvan #Money #OutlookMoney #OutlookMagazine #OutlookGroup #Interview
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NewsTranscript
00:00 The first question that I would like to ask you is, belonging to this NBFC which plays a very vital role in the flourishing economy,
00:07 do you think that this budget has lived up to the expectation of the NBFC sector?
00:11 Well, I don't know about lived up to the expectation but I think the budget has some very huge positives for the NBFC sector.
00:20 First of all, I think is the vote of confidence from the Honourable Finance Minister,
00:26 acknowledging the role that NBFC have played and continue to play.
00:31 So that itself I think was a very major step, positive step.
00:37 And then of course there were specifics in terms of the 1 lakh crore first loss guarantee,
00:44 which the government said they will pick up 10 percent.
00:48 Then there was also some changes on the taxation side.
00:51 So overall I would say after a long time, the Finance Minister has sort of focused specifically on the NBFC sector.
01:01 So overall we would say very positive.
01:04 As the theme of this entire conference is that there are some unfinished agendas.
01:09 So can you throw light on those unfinished agendas?
01:11 Yeah, the major part of the unfinished agenda is to make sure that there is an institutionalised framework to support the growth of NBFCs.
01:20 Because as I think has been repeatedly said, the last mile credit delivery in this country,
01:27 especially to small businesses, small traders, small transport operators, that is essentially done by the NBFC sector.
01:36 And for the economy to grow, and ours is a consumption driven economy,
01:42 and for the economy to grow you need a robust banking sector, you also need a robust NBFC sector.
01:48 So essentially what we are saying is that this is a relationship of a wholesaler and a retailer.
01:55 The banks are the wholesalers, the NBFCs are the retailers.
01:58 So if there is a good institutional framework whereby credit can be delivered to the last mile,
02:05 it's overall good for the economy.
02:07 I don't think we should just make this about what's good for the NBFCs.
02:11 I think it is more about what's good for the overall economy,
02:14 for growth of the automotive sector, for growth of MSMEs, that whole thing.
02:19 And NBFCs play an important role in that growth.
02:23 So I think that's the perspective in which we need to appreciate this.
02:27 Sir, moving on to the next part, the entire crisis was started after the IL and FS defaulting in September
02:32 and after the Diwan housing and finance limitation.
02:35 So how do you see this?
02:36 And you, like in this meeting, one fact came out that we can't generalise this crisis.
02:41 Exactly.
02:42 Can you throw light on that?
02:43 Absolutely. You said it yourself.
02:45 IL/FS happened in August or September 2018.
02:50 We are now almost at the end of July 2019.
02:53 We are still talking only about the same two names.
02:56 IL/FS, DHFL, IL/FS, DHFL.
02:59 So you please tell me, there are nearly 10,000 NBFCs.
03:03 Have you heard any other name defaulting?
03:06 So I think you have answered your own question.
03:09 Initially this was a problem concerning two entities.
03:13 Please fix those entities.
03:15 Don't condemn a whole sector because two people did something wrong.
03:21 So that is the answer.
03:22 The fact that nobody else has gone into default,
03:26 the fact that no one else has created any other problem,
03:30 itself is the answer to your question.
03:32 So what are your future expectations?
03:34 What would you like the government to do?
03:36 We would like this confusion and some of this negative sentiment
03:42 towards NBFCs to settle down very quickly so that people can get on.
03:47 NBFCs can get on, the rest of the economy can get on
03:50 and all the segments of the economy that we serve,
03:54 they can also get on with it.
03:56 So that is our expectation and hopefully it happens sooner than later.
04:01 Thank you.
04:02 Thanks very much.
04:03 Thank you.
04:04 (upbeat music)
04:06 (upbeat music)