Chairman and Managing Director’s Statement

The significant financial achievements continued to create new milestones during the year, putting us on a firm footing on the operational front. The performance epitomizes the renewed Vision 2.0 of the Bank at work.


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Total Asset Base registered annual growth of 43.2% in FY 2019

The year that was

I take pride in announcing that FY 2019 has been the second successive year of remarkable achievements for your Bank. The significant financial achievements continued to create new milestones during the year, putting us on a firm footing on the operational front. The performance epitomizes the renewed Vision 2.0 of the Bank at work. A glimpse of your Bank’s performance during the year is as under:

  • Asset Base registered annual growth of 43.2%, reaching a new peak of ₹ 1,55,861 crore as at the end of FY 2019 and doubled over a period of 2 years
  • Loans & Advances grew by 42.9% and was ₹1,36,230 crore as at the end of FY 2019, complementing the 19.13% growth clocked by SCBs in MSME credit
  • Backed by a robust increase in Interest Income, Total Income recorded a 50.2% growth
  • Net Profit scaled an all-time high of ₹1952 crore and that too at a faster growth rate of 36.5%, as against 27.5% in previous year
  • The intense focus on asset quality resulted in improved GNPA for the second successive year from 0.94% to 0.63%
  • The shareholders’ metrics have improved viz. ROE, ROCE and EPS have increased from 10.2%, 10.2% & ₹26.87 during previous year to 12.59%, 12.57% & ₹36.70 respectively as at the end of FY 2019

How we did it

The commendable growth has been driven by the Institutional Finance book, which has registered sustained growth of around 48% during each of the last 2 FYs. It was directed largely to PSBs, apart from SFBs and well rated NBFCs, thus covering the larger masses especially at the bottom of the pyramid. The Bank, therefore, registered 181% Y-o-Y growth in refinance outstanding to PSBs in FY 2019.

The Bank embraced volume driven rather than margin driven business orientation as a strategy to ensure sustained business growth; this resulted in 53.4% rise in Interest Income, thus giving a 36.5% push to Net Profit, on Y-o-Y basis.

Pillars of the growth story

The Direct Lending operations of the Bank have continued to witness product & process revamp during the year through innovative and simplified product lines, new partnerships, higher new customer acquisitions, faster credit delivery and smaller ticket sizes of loans. There was a two-fold increase in new customers and 11.4% growth in overall customer base. Also, Hub & Spoke model at 6 major business centres was introduced.

Over the years, the Microfinance operations of the Bank have helped fledgling MFIs to upscale through finance, capacity building support, corporate governance enhancing measures and policy advocacy; the Bank has been part of the transformation journey of partner MFIs to SFBs/ Universal Bank. During the year, a strategic shift was made in Microfinance operations through the PRAYAAS initiative, which is a first-ever effort to deliver “affordable credit” to the small entrepreneurs, especially women, at the bottom of the pyramid. This will be in partnership with institutions having ground level presence.

Your Bank has always been at the forefront in promoting intermediary institutions showing promise in making a positive difference to the MSME credit ecosystem. One such attempt was the pilot scheme to finance new-age Fintech NBFCs, thus supporting them in their stabilization phase.

As they say, what India needs is more of innovative and technological entrepreneurship. These ventures, if nurtured well, can achieve scale, become globally competitive and serve as true employment hubs apart from creating economic value. During the year, your Bank focused on the Fund of Fund operations, with particular focus on the GoI sponsored Fund of Funds for Startups (FFS). Under FFS, as on September 30, 2019, against the aggregate commitment of ₹3,123 crore, the Bank has provided support of ₹599 crore to Alternate Investment Funds (AIFs), which has resulted in investment of ₹2,346 crore in 266 Startups. The Bank has introduced various process enhancements in the Scheme and introduced platforms like Investors’ Day to support Startups through match making with AIFs. The MSME Venture Capital arena would see more benefits by way of a State of the Sector Report initiated by the Bank and the Impact Study of FFS, all aimed to devise means for bringing robustness & objectivity into venture funding.

The Macro economy

FY 2019 and the half year into September 2019 have been a mixed bag for the Indian economy. The second successive political mandate promises political stability and a host of sector friendly initiatives. This is critical in the light of the fact that the economy after clocking significant growth during the first half of FY 2019, was impacted by global trade war tension and consumption slowdown in the domestic economy.

The 50% growth in GDP from $2 trillion in FY 2014 to $3 trillion in FY 2019 bears testimony to the fact that structured Govt reforms, coupled with “inclusive participation”, make the envisaged vision realizable. This sets the tone for the plan of action that would lead the country to the Hon’ble Prime Minister’s “challenging but achievable” vision to make India a $5 trillion economy by 2024.

The Micros of Entrepreneurship

In a country which is adding 10-12 million youth to the formal workforce annually, entrepreneurship holds the key to self-employment for sustenance or to nurture employment generating entities. I emphasize on “Inclusive Participation” which will be more of bottom-to-top approach, with entrepreneurship at the base. I take pride in conveying that, being a DFI for MSME sector, the Bank has engaged in entrepreneurship and skill development activities since inception. I strongly endorse the U.N.’s view that Entrepreneurship Development is in real terms “Entrepreneurship-for-Development”.

On the Global Entrepreneurship Index, the country is at 68th position among 137 countries, with scope to scale up. During the last two years, the Bank has engaged with the entrepreneurial space through a structured mission and a host of non-credit activities. This involves demonstrative institutional measures, to be scaled up so as to address specific issues, which would unlock the country’s entrepreneurship potential. The main initiatives are as follows:

  • SWAVALAMBAN, a pan India print media campaign to inculcate entrepreneurship culture, has seen 12 editions till now and succeeded in reaching masses
  • Entrepreneurship education, training programmes and mentorship support are being buttressed by the Bank through focused initiatives such as exposure visits of MSEs to Medium & Large Industries and Management Development Programmes in partnership with IITs & IIMs
  • The entrepreneurship education campaign “Udyam Abhilasha” was a geography focused drive, run across 115 ‘aspirational’ districts, enabling creation of 440+ enterprises
  • A demonstrative piece of institutional intervention in the field of tertiary education to produce skilled manpower is that the Bank is working with USHA, to set up 1,000 Swavalamban tailoring schools to empower 20,000 women in a year
  • The Bank launched SIDBI-ET MSE awards to recognize the efforts of both MSEs and lenders; also acknowledged and supported SWAVALAMBAN role models, who achieved their vision of being an entrepreneur despite hurdles
  • Recognizing the importance of Research & Development, the Bank set-up “Centre of Excellence” in tie-up with IIT, Delhi, to protect the rich heritage of MSME products
  • Virtual entrepreneurial support is the need of the hour in the increasingly digitalized world. The platform of Udyamimitra with presence of 148 lenders and around 25,000 handholding agencies supports this need
  • The Bank is trying to fill the institutional void in the Livelihood segment interventions by launching the Women Livelihood Bond with World Bank and anchoring the digital credit delivery platform for BPL segment under the Self Employment Program of Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM)
  • While demand side initiatives form the core of the Bank’s programmes, the supply and policy advocacy side is also being addressed by bringing out knowledge products like CIBIL MSME Pulse and CriSidEx; during the year, Microfinance Pulse was added, which is an insight report on Microfinance sector.

I take pride in conveying that, being a DFI for MSME sector, the Bank has engaged in entrepreneurship and skill development activities since inception. I strongly endorse the U.N.’s view that Entrepreneurship Development is in real terms “Entrepreneurship-for- Development”.

Contribution by group companies

I would also like to acknowledge the role of associate and subsidiary network of the Bank, which creates the all-encompassing MSME ecosystem for meeting the varied needs of the sector. MUDRA has enabled credit flow of ₹21,494 crore to the last mile lenders during last 4 FYs, which formed part of credit flow of ₹8.93 lakh crore under PMMY, providing credit access to 18.25 crore micro loan beneficiaries, in the sub- ₹10 lakh loan basket. ACUITÉ, erstwhile SMERA, is gaining traction, with 45,000+ MSME Ratings and 7,500+ Bank ratings undertaken by them. SVCL is managing 7 funds of Venture Capital and Growth Capital. CGTMSE has created 34.60 lakh MSE loan accounts, with loan amount of ₹1.76 lakh crore. RXIL operates the TReDS platform, which along with SVCL-promoted M1 Exchange, holds ~60% share in the receivable finance market. ISARC focuses on resolution of NPAs in the MSME sector. ISTSL offers technological, advisory and consultancy services, mainly for Energy Efficiency projects.

Taking forward its legacy as an institution builder, the Bank, along with 5 PSBs and their associates, developed online loans platform “PSBLoansin59minutes” for effective credit delivery to MSMEs through diverse set of lenders; the portal serves as “Loan Hub”, encompassing all types of loans under the portal.

Recognizing its People, Processes and Technology as the key enablers, the Bank has taken various initiatives like introduction of meritbased performance evaluation, rationalizing manpower, credit delivery structure etc. besides adopting latest industry practices viz. Work from Home, Child Adoption Leave and Paternity Leave.

Future endeavours

The well-researched Vision 2.0 inked out by the Bank would be the guiding light for the Bank’s role and strategic initiatives to be undertaken in coming years for the overall development of the MSME sector. The Bank’s vision and initiatives would always remain aligned to the national goals of Financial Inclusion, Social Upliftment and Opportunity Creation. With Vision 2.0, the Bank will take its role in the nation development to even greater heights.

Chairman & Managing Director