New Delhi ,
According to Sudarshan Chari, Executive Director and CEO, lending to small and medium enterprises (SMEs) to finance their transition to less carbon intensive businesses is emerging as an opportunity for financial institutions to grow their loan books in the future. Poised to be an important part. Head of Business Banking, DBS Bank India Ltd.
Chari said in an interview that this is clearly one of the agenda items for DBS Bank. He said the key challenges faced by SMEs in adopting Environment, Sustainability and Governance (ESG) initiatives include the cost of their deployment, access to experts and difficulties in evaluating the return on investment. Chari said lending to small businesses for sustainable enterprises is a viable lending option for banks.
Chari said that most of the DBS Bank SME Loans come in the form of digital loans and are meant for both working capital and transition financing. If there is potential to support sustainability, we support that change, he said.
“I believe it will be a larger share than it is today Future Financing is needed when adoption rates rise,” he said.
“There is a lot of talk in terms of carving out a special purpose vehicle within a bank and getting subject matter experts to drive the agenda (sustainability financing) for them. As the adoption rate increases, every bank will have one,” Chari said.
He added that some NBFCs have come up with a focus on sustainability financing. “They will also seek to obtain equity and debt capital to support sustainability financing. Some banks have already taken the lead and others will catch up.”
A DBS Bank statement cited a survey conducted by the bank and Bloomberg Media Studio in August, saying SMEs in India lead their regional counterparts in Asia, with ten in ten as a high priority for their business. With a nine rating ESG. The survey found that SMEs in India argue that an ESG practice can enhance their competitive edge and enhance company reputation. While ESG frameworks help businesses shape their sustainability decisions and transparently report progress, they also represent a company’s commitment to being more socially responsible, the statement said.
The survey found that 92% of SMEs feel that environmental issues related to pollution monitoring, climate change, carbon footprint, depletion of natural resources etc. are top priorities directly affecting their industries and consequently their businesses are affecting.
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