Supply Chain Finance is much less than 1% of our GDP, a major reason for this is because of large companies pay late to their suppliers using Prisoner's dilemma. There is a huge value in Supply Chain Financing, which could result in a massive 50% drop in the cost of working capital. In the last couple of years India has shown some benchmark with corporates and banks partnering for successful deals. Very recently Maruti Suzuki partnered with Bank of Baroda for dealer financing. Most importantly, negligible non-performing asset (NPAs) in the segment is a driving factor for banks, which they attribute to the inherent structure of the SCF.
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Manish Sinha, MD, Dun & Bradstreet India, in an email interaction with SME WORLD!
Access to formal finance by the MSMEs is considered to be a stumbling block in the growth of the sector. Why do our financial institutions stay away from small financing? Are looming NPAs the only reasons?
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