Shyam Maheshwari SSG explains about the covid battered market and economy

As India’s pandemic battered businesses and economy emerge into a still uncertain next normal, there is an increasing focus on private credit as a fuel to drive business expansion and sustainable long-term growth. This along with traditional lenders such as banks especially PSU banks which have done Yeoman service for the country during the difficulties of 2020 will be facing greater pressure in 2021 and beyond.

Mr. Shyam Maheshwari serves as Chief Executive Officer, Founder and Partner of SSG Capital Management (Singapore) Pte. Limited

According to Shyam Maheshwari, the Indian credit market has been dominated by banks and non-bank financial companies for a long period. It started with primarily dominance of PSU banks and then the private sector banks. Still, the credit to GDP ratio is relatively modest and low for the stage of growth of the country. As the economy develops credit intensity, it would probably increase initially and the need for credit is very much out there. The challenges the banks and non-banks as it is rightly pointed out may not be able to fulfil that requirement and that’s where the private credit demand is extremely apparent and necessary for the growth, says Shyam Maheshwari SSG Capital management.

As NPS will challenge their bottom lines, NBFC’S too have been facing their share of challenges with the past 2 years as it is well known. Given the lending support that Indian businesses need to hold their own against for domestic and international competition including export markets as well as they need to innovate and expand the fast unique technological and customer landscape. Shyam Maheshwari details the role of private credit as the key factor is the fastest growing alternative asset class in the world and has been for the last 4 to 5 years evolved. In the 2009 global financial crisis, lots of debt capital has been flowing through asset managers rather than banks.

Today over a trillion dollars in size, bank lending is shrinking on account of all the increased regulations. The ability of independent asset managers to up this share advocated by banks is the trend globally. Post IFS crisis and the continued bank NPA crisis, credit in India has become a huge need for growing companies as well as troubled companies. NBFCS over getting that space and alternative asset managers are entering that. Private credit as an asset class is still scaling up in a relatively small basin of India. India is about a 3 trillion taller economy and growing at a 6 to 7 percentage rate is critical for the market and is huge growth potential.

The presence of credit bureaus in India as compared to other markets will enhance the use of anti-fingerprint credit. Also, there’s a large opportunity to invest with 25 to 100 billion dollars over the next 4 to 5 years and potentially grow to be larger than the private equity industry, explains Shyam Maheshwari. The fact that they have some 290 billion dollars of dry powder or private credit available highlights an opportunity for the Indian economy in the catalyst for opening up endless possibilities for Indian businesses as in navigating the next turbulent next normal.