Cooperative Banks Must Adapt Policies for MSME Lending: Maharashtra State Cooperative Bank
Maharashtra State Cooperative Bank's chairman, Vidyadhar Anaskar, emphasizes the need for cooperative banks to change their lending policies for micro, small, and medium enterprises (MSMEs). He advocates for a project-based approach and reduced reliance on security collateral.
MsmeCooperative BanksReal EstateProject FinanceCollateralReal Estate PuneJun 09, 2025
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.
Frequently Asked Questions
Why do cooperative banks need to change their lending policies for MSMEs?
Cooperative banks need to change their lending policies for MSMEs to focus more on project-based finance rather than security collateral. This shift can better support the growth and development of micro, small, and medium enterprises.
What is the significance of the MSME sector in India?
The MSME sector is highly significant in India as it supports close to 11 crore families and is one of the most important employers in the country.
Why is the housing segment considered lucrative for cooperative banks?
The housing segment is considered lucrative for cooperative banks because it offers better returns and a higher assurance of repayment based on the goodwill of developers who follow good practices.
What are the challenges in commercial real estate lending for cooperative banks?
One of the main challenges in commercial real estate lending for cooperative banks is that it is not classified as a priority sector by the Reserve Bank of India. Additionally, the sector often receives dual financing, which can complicate the lending process.
How can auditors and accountant consultants help in expediting project finance?
Auditors and accountant consultants can help in expediting project finance by taking a more constructive and supportive approach, ensuring that the financial processes are streamlined and efficient.
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