Experts have called for a rating system that assesses entrepreneurs on their compliance levels. An entrepreneur who adheres to statutory and regulatory norms should get financial assistance when he or she needs it.

At present, when an entrepreneur is in financial trouble, there is no support from banks, said T Muralidharan, Chairman of TMI Group and FICCI’s Telangana State Council.

“There is no model developed by banks that rates and rewards entrepreneurs who religiously meet regulatory norms,” he observed.

At a panel discussion on ‘Keeping your Business Well Funded’ here on Friday as part of the SURGE SME Conclave organised by BusinessLine in association with Aditya Birla Sun Life Mutual Fund, Muralidharan, a serial entrepreneur, said seeking collateral from professionals doesn’t make any sense.

N Mallavadhanulu, Circle General Manager of Andhra Bank, said the markets have evolved. From a stable state a few decades ago, they have become volatile now as they were integrated with global markets.

He said public sector banks contributed about ₹17.5-lakh crore, or 40 per cent, of the credit needs of MSMEs as of March 2019. “There is a huge amount of data available now. Using artificial intelligence and machine learning tools, this data can be efficiently analysed to understand their credit requirements better. The public sector banks would continue to play a good role,” he said.

Srinivas Garimella, Chairman, Federation of Telangana Chambers of Commerce and Industry (FTCCI), said the success of an enterprise can be measured by the way the entrepreneur behind it manages his or her cash flows.

“It is not about profits, topline or other parameters, it is about good cash flow management. How good you are at employee management and delivery of services play a crucial role in making an enterprise successful,” he said.

Understanding finance

Srinivas, who is also Managing Director of Vega Conveyors and Automation, felt that a number of entrepreneurs are very good at selling their products and services but lack the ability to comprehend issues related to the macroeconomy and finances. They would need shared services to address this gap, he pointed out. He said excessive investments made in unproductive land parcels won’t help entrepreneurs. “You need to put your money in financial instruments that offers quick liquidity in times of need,” he said.

Karan Dave, Joint Vice-President at Aditya Birla Finance, said large banks have learned a lot from start-ups. “They built larger models to offer quicker services. They are able to understand the customers better using technological tools to do psychometric analyses and to gauge risk perception,” he said.

G Naga Sridhar, Deputy Editor, BusinessLine, moderated the session.