Kotak Bank Expects MSME Loan Demand To Rise In Second Half

The private sector lender sees fresh demand for working capital and term loans picking up in the second half of the current fiscal year as the new Modi government prioritises a rural economic uplift.

"As consumption demand picks up it will aid working capital and term loan demand in the MSME space," said Manish Kothari, president and head of commercial banking at Kotak Mahindra Bank.

He expects sectors like infrastructure, agriculture and allied industries to drive higher capital expenditure needs.

Kothari, who oversees Kotak's nearly Rs 1 lakh crore commercial banking business, believes small and medium industries will lead an investment revival. "MSMEs have to be the trigger for growth because when the large corporate cycle kicks in the entire supply chain will move up," he stated.

The latest GDP data signalled a slowdown in rural consumption. The new NDA government has therefore signalled targeted reforms to boost the rural economy impacted by erratic weather and weak crop yields.

Kothari is optimistic that infrastructure spending will further revive loan demand in the second half of the fiscal. A predicted normal monsoon and policy continuity for infrastructure projects under the re-elected Modi government are positive signs, he said.

With inflation expected to ease aided by a normal monsoon, Kothari hopes for an interest rate cycle turn that would support the overall financing environment for MSMEs going forward.

(KNN Bureau)

MENAFN18062024000155011030ID1108345005