FIBAC 2021: India Inc spoilt for choice as funding avenues open up

 Panelists at FIBAC say banks lose monopoly of being the only source of funding to firms

Companies are increasingly becoming demanding seeking services and pricing, irrespective of their sizes, as banks lose the monopoly of being the only source of funding to firms, senior bankers discussed at Day 2 of FIBAC 2021.

“The corporates are now spoilt for choice. Banks, NBFCs, markets, and even private equity, everyone is willing to lend to corporates. And as the economy grows, the avenues are all going to expand,” said Ashwani Bhatia, managing director for corporate banking and global markets at State Bank of India.

Earlier, the large companies had this power, but increasingly medium-sized and even smaller companies are negotiating hard, the panelists said. This is a big change in the corporate lending environment in India, the panelists said.

Banks, as entities that lend using their balance sheet, must get a way to find a seat amidst the non-balance sheet lenders, said K V S Manian, whole-time director, and group president, corporate banking, Kotak Mahindra Bank.

“The clients are increasingly becoming more sophisticated and are always very, very demanding,” said K Balasubramanian, managing director and head of corporate banking group, South Asia, at Citi.

“If you look at the last three, four, or five years, this is not actually restricted only to the top clients but is straddling the entire line. Even the mid-market and the smaller clients are way more sophisticated. They are basically looking at banks for solutions and not for profits," Balasubramanian said. The solutions, too, are case-specific and banks have to now offer those, making customer engagement plans “extremely challenging.” The firms have become “very, very price-conscious”, but willing to give concessions for better quality advice.

Bankers agreed that talent is becoming the real differentiators, and the banking industry is leaning more towards specialists.