SMEs in India today contribute a large share to the economy. Not only that, but they also are responsible for 40% of India’s total exports. With an incredible growth story in the last decade or two, micro, small & medium businesses play a critical role in the growth of India.
For many SMEs though, the biggest problem is securing funding for their business. The existential gap between the people running these ventures and financial institutions is quite large. Aiming to reduce this gap is SMEcorner.com.
Founded by Samir Bhatia, the Mumbai-based company is an online platform that enables SMEs to access loans easily from Banks and NBFCs. Under this platform, SMEcorner aims to minimize intermediary risk and extend transparency to the borrowing process, while assisting businesses in fulfilling their financial requirements. The online marketplace, SMEcorner has created gives SME’s easier, faster and more efficient access to resources that can help them grow, expand or finance a project.
We sat down with Samir Bhatia and discussed among other things, SMEs, his career, the budget and navigating through the Financial Crises of 2008.
Tell us a bit about your early life
I spent my early years in Mumbai, where I was born. After completing School & College, I went on to purse Chartered Accountancy and Cost Accountancy. During my Chartered Accountancy training, I chose to do a year of Internship with Citibank, which was a very good decision in terms of training and broadening perspective.
How was the experience at Citibank?
Citibank is a fantastic place to start one’s career. I got very good exposure to the best systems and processes and got plenty of opportunity to develop and implement new systems. I learnt from the best professionals and got a chance to travel the world to implement projects and systems developed by me.
You were also among the founders of HDFC Bank. What was it like to actually be a part of India’s biggest banks at a very early stage?
The feeling was one of tremendous joy and satisfaction. I was part of a passionate team of 6 individuals who did the early planning and strategy work for setting up the bank and also setting up the entire infrastructure, systems, processes etc. I thoroughly enjoyed it. We all joked that we were doing everything from “Janitor to CEO” in those days.
At HDFC Bank, you were a pivotal figure in the corporate banking division for 12 years, from 1994 to 2006. How did the banking landscape change during these years?
When we set up HDFC Bank, we brought in a totally new perspective to doing business – new products, new channels and faster decisions. Wholesale Banking was the mainstay of most banks way back in 1995 when we started business. Slowly over time, Consumer Banking asset products were introduced by banks and Credit cards also started getting popular. By the time I left the bank in 2006, Retail Lending was almost 45% of the business of the bank. Another big change in the Wholesale Banking side was the development of the SME business. Supply chain financing, which was pioneered and introduced by HDFC Bank, was a huge business.
How built up Barclays’ operations from the ground up in India, something you had experienced at HDFC. What similarities or differences were there between the two? And how did this experience contribute during the initial stage of SMECorner?
The experience of setting up HDFC Bank helped tremendously while setting up Barclays Bank. The difference, however, was that while HDFC Bank, being Indian, offered more freedom to define systems, process, products etc, Barclays Bank, being a MNC bank, was strongly governed by the policies and systems of the Head Office.
SMEcorner, which I my own venture, was a totally different experience; While the entrepreneurial skills which I picked up at HDFC Bank and Barclays Bank helped, the new venture was a totally different ball game being in the Digital world.
You were the head of Barclays’ India operations during the 2008 financial crisis. Can you comment on what it was like for you as CEO? (Bearing in mind that while India wasn’t hardest hit)
All the Banks in India who were aggressive in Consumer Lending took a big hit in the 2008 criris. The world changed overnight and the economic recession that followed made it very tough to recover money from borrowers. The crisis taught all the banks the importance of setting up a very strong Collections infrastructure even in good times. It was a difficult period but one that taught lessons no Business school could ever teach. Anyone who worked in that period can run the most difficult business now!
And now of course, you’re the founder & CEO of SMECorner.com. Where did the idea for starting a business like this originate?
Over the years when I was dealing with SMEs, I saw that they really struggled to get financing. They did not know which bank to approach and who to approach in those banks. They fell prey to middle men who would charge a hefty commission and not necessarily get them the best deal. So I thought it would be nice if there was an online platform where SMEs could apply for a loan and get transparent services without cost.
What kind of partnerships do banks and NBFC’s look for in SME’s?
Some of the parameters financial Institution look for is a good credit score of the applicant and the business, financial stability for past 2 years, nature of industry and the transaction history on the bank statement for the last one year.
Apart from that, the background of the promoters is also important. Here’s a question that a lot of entrepreneurs in India are asking – how do I ensure that my business get funding.
The first round of funding always comes from family and friends. Banks rarely fund startups and angels also look for some Proof of concept before they give money. So make a good business plan, get some initial funding from family and friends, do a proof of concept before going to Angels for finding. Crowd funding could also be an interesting platform to get funding.
Where do you think SME’s in India are heading?
SMEs in India are significantly upgrading their technology, product range, product quality, and are using the Internet to market and sell their products. The Ecommerce boom has provided a huge new opportunity for SMEs to expand their business and sell online. Easier availability of funding can further help SMEs to expand their business.
What are your thoughts on the budget?
There are many provisions in the budget to help the SMEs. In particular, the setting up of MUDRA bank will give a huge fillip to the SMEs in terms of faster and cheaper availability of finance. Infrastructure will also receive a boost which will further help ancillary industries and SMEs.
In a nearly three decade long career in the financial services industry, what is the most important lesson you’ve learned?
Invest In good people and build a good network of contacts in the community – personal and professional.
Business has changed. Since the liberalization of India’s economy in the early 90’s through multiple financial crises, how has the role of a senior executive changed and what lessons have you learned?
The world is now getting faster and product life cycles and economic cycles are shortening. The modern day company and hence the executive, has to be nimble and quick in adapting to change. The focus on technology is also high so the modern day senior executive has to keep himself/herself updated with the latest In the digital world. Also, the median age of the senior executive is now much lower than before.
And finally, any words of wisdom for students or professionals who want to excel in the world of finance?
Learning is a constant process and in today’s world, reading and learning and constantly upgrading ones knowledge and skills are critical. Also, every finance person should do a course in technology to understand that aspect as the world is turning Digital very very quickly.