Cooperative Banks Must Adapt Policies for MSME Lending: Maharashtra State Cooperative Bank
Pune: Maharashtra State Cooperative Bank's chairman, Vidyadhar Anaskar, has called for a significant shift in the decision-making processes of cooperative banks when it comes to lending to micro, small, and medium enterprises (MSMEs). Anaskar emphasized the need for a more project-based approach to financing, moving away from the current emphasis on security collateral. "Many banks insist on a personal property collateral while issuing loans. This is not the intent of MSME financing," he stated on Sunday.
He was speaking at the ‘Banking and MSME Sector Conclave 2025' organized in Pune by Sahakar Bharati and the Global Indian Origin Network. Dinesh Gandhi, chairman of Sahakar Bharati, highlighted the importance of the MSME sector, noting that it supports close to 11 crore families, making it one of the most significant employers in the country.
Anaskar also discussed the potential and challenges in the real estate sector. He mentioned that the housing segment is highly lucrative for cooperative banks, offering better returns and a higher assurance of repayment based on the goodwill of developers who follow good practices. "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," he added.
The chairman pointed out that the real estate sector often receives dual financing, from both buyers during various stages of construction and from banks. This dual financing can complicate the lending process. Anaskar also called for a more constructive approach from auditors and accountant consultants to expedite project finance.
Indraneel Chitale, managing partner of Chitale Bandhu Mithaiwale, echoed the need for streamlined processes. He pointed out that many first-generation entrepreneurs start their businesses as micro and small enterprises. However, these business owners often get bogged down in paperwork while trying to secure loans from banks. "Lenders should work towards reducing the red tape so that these entrepreneurs can focus on growing their businesses," Chitale said.
The conclave brought together key stakeholders in the banking and MSME sectors, aiming to foster a more supportive and efficient lending environment. The discussions highlighted the importance of adapting policies to better serve the needs of MSMEs, thereby promoting economic growth and employment.
