BEND A LITTLE AND SPEND A LITTLE MORE TIME | EXPAND MSME TO EVERY UNTAPPED SEGMENTS | GLOBAL TV

NV Paulose, Chairman, Global TV +91 98441 82044

The Micro, Small, and Medium Enterprises (MSME) sector has long been the backbone of the economy, contributing significantly to employment, innovation, and GDP growth. We can leap into the economic landscape by introducing the MSME Models in any sector like Media, particularly in Social Media and in Non-Periodical Print Media. Despite its critical importance and huge potential MSMEs are still kept in isolation with one another.

This is the major reason for MSMEs continue to face significant challenges in accessing financial support, market linkages, and other essential resources. The question arises: can banking bend a little to unlock the true potential of MSMEs?

A Case for Change in Banking Practices

For decades, traditional banking has adhered to a risk-averse model, prioritizing collateral-based lending and stringent eligibility criteria. While this approach ensures financial stability for banks, it excludes a vast segment of MSMEs that lack tangible assets or formal credit histories.

In today’s digital and interconnected world, it is imperative for banks to evolve their practices and embrace flexibility. Doing so would not only benefit MSMEs but also catalyze economic growth on a broader scale.

Banks should move from the ‘Bankers Interest’ Mindset to the ‘Facilitators Commission’ Mindset!

What does this mean? Imagine a person approaching the bank for a loan to procure infrastructure and tools to create a facility to conduct a shooting for TV episodes and Non-periodical Publications. Bank is asked to give a loan of ₹10, 00,000/-. One bank takes it as an individual case and offers a loan at 10% Interest. Another Bank takes it as an opportunity in line with the principle of the 100th Monkey phenomenon. It is a popular concept that stems from studies about how new behavioural patterns are born in societies.

What Is the 100th Monkey Concept?

The concept originates from a story about Japanese researchers in the 1950s who studied macaque monkeys on the island of Koshima. The story goes that one monkey learned to wash sweet potatoes before eating them, and this behaviour gradually spread through imitation to other monkeys in the group. Once a critical mass (e.g., the “100th monkey”) adopted the behaviour, it allegedly spread instantaneously and mysteriously to monkeys on other islands.

The 100th Monkey phenomenon has become a metaphor for the idea that when a critical mass of people adopt an idea, behaviour, or innovation, it creates a tipping point where the behaviour spreads rapidly and widely. Collective consciousness and shared wisdom lead to spontaneous and simultaneous changes across groups.

Hence the second Bank captures the idea and understands there is a potential for One Million such loans in the country. They open negotiations with companies that can provide the facilities with better qualities at a cost of ₹8,00, 000/- each also with a commission of 10% and an advance cash payment incentive of 2%.

The Bank offers the loan for 6% Interest giving 3 years’ time to repay the loan with a down payment of ₹2,00, 000/-.

Let’s break this down and calculate the financial aspects based on the information provided.

Scenario

• Loan amount: ₹10,00,000 (as requested by the individual for infrastructure and tools to conduct a shooting).
• Bank 1: Offers loan at 10% interest (traditional interest-based mindset).
• Bank 2: Moves to a commission mindset, negotiating with suppliers for better pricing and terms, offering loans at 6% interest with a down payment of ₹2,00,000. It also includes supplier commissions.

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Bank 1: Interest-Based Loan at 10%

Loan Details:

• Loan amount: ₹10,00,000
• Interest rate: 10% per annum
• Repayment period: 3 years

This gives an EMI of ₹32,267.

Total Repayment:

• Total paid over 36 months = 32,267×36=₹11,61,61232
• Total interest paid = ₹11,61,612−₹10,00,000=₹1,61,612

Bank 2: Commission-Based Loan at 6%

Loan Details:

• Negotiated cost: ₹8,00,000
• Commission for bank: 10% of ₹8,00,000 = ₹80,000
• Advance cash payment incentive for supplier: 2% of ₹8,00,000 = ₹16,000
• Total upfront payment from the bank to the supplier: ₹8,00,000 – ₹80,000 – ₹16,000 = ₹7,04,000
• Down payment by the borrower: ₹2,00,000
• Loan amount financed by the bank: ₹6,00,000
• Interest rate: 6% per annum
• Repayment period: 3 years

EMI Calculation:

Using the same EMI formula:

This gives an EMI of ₹18,297.

Total Repayment:

• Total paid over 36 months = ₹18,297×36=₹6,58,
• Total interest paid = ₹6,58,692−₹6,00,000=₹58,692

Comparison of Scenarios

Aspect	Bank 1 (Interest Mindset)	Bank 2 (Commission Mindset)
Loan Amount	₹10,00,000	₹6,00,000
Interest Rate	10%	6%
Total Interest Paid	₹1,61,612	₹58,692
Total Repayment (3 years)	₹11,61,612	₹6,58,692
Down Payment by Borrower	None	₹2,00,000
Negotiated Infrastructure Cost	Not applicable	₹8,00,000
Commission Earned by Bank	None	₹80,000
Supplier Incentive	None	₹16,000

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Key Takeaways

1. Cost Efficiency: Bank 2 reduces the infrastructure cost by negotiating and passes some of the savings to the borrower.
2. Borrower Benefits: The borrower pays less overall with lower interest rates and a smaller principal amount to repay.
3. Bank Revenue: Bank 2 generates commission revenue while offering better loan terms, creating a win-win scenario.
4. Scalability: If the bank can implement this model across 1 million such loans, it opens up enormous economic potential and reinforces the 100th Monkey concept by encouraging similar ventures nationwide.

Bank 2’s innovative model leverages multiple revenue streams to maximize returns while maintaining a lower interest burden on the borrower. With a loan amount of ₹6,00,000, the bank generates a total income of ₹1,54,692, comprising ₹58,692 from interest and an additional ₹96,000 from commission and supplier incentives. This represents a return of 25.78% on the loan amount, significantly higher than the 16.16% return achieved by Bank 1.

Additionally, Bank 2 secures a down payment of ₹2,00,000 from the borrower upfront, ensuring immediate liquidity and reducing the risk on the loan. The ₹80,000 commission and ₹16,000 supplier incentive further add to the bank’s revenue, received alongside the down payment, enabling Bank 2 to generate substantial income even before the loan repayment begins. This model not only enhances profitability but also creates a win-win situation by lowering the borrower’s overall repayment burden.

This model not only benefits the individual borrower but also demonstrates the potential for scalability. If the bank replicates this approach across one million such loans nationwide, it could revolutionize the lending landscape. By moving from an interest-driven mindset to a commission-driven approach, banks can unlock economic opportunities, encourage entrepreneurial ventures, and create a ripple effect of financial growth and innovation. The 100th Monkey phenomenon underpins this approach, showing how a small behavioural shift at scale can lead to widespread economic transformation.

Reducing the actual loan exposure

In the case of Bank 2, the ₹96,000 (₹80,000 commission + ₹16,000 supplier incentive) is earned at the very beginning of the transaction, effectively reducing the actual loan exposure to ₹5,04,000 (₹6,00,000 loan – ₹96,000 upfront earnings). This creates a significant additional advantage for the bank:

Lower Risk Exposure: With only ₹5,04,000 at actual risk instead of ₹6,00,000, the bank minimizes its financial exposure while still earning interest on the full loan amount.

Enhanced Effective Return: The ₹58,692 interest earned over three years on the reduced risk of ₹5, 04,000 translates to an effective return of 11.64% on the actual exposure. Combined with the upfront ₹96,000, the total return on the actual exposure rises substantially, making the model even more profitable.

Improved Liquidity: The ₹96,000 earned upfront can be reinvested or used for operational purposes, boosting the bank’s liquidity and enabling it to fund more loans or generate additional revenue streams.

Sustainable Revenue Model: Expanding income sources through commissions and supplier incentives, the bank achieves profitability without heavily relying on interest payments. Create a sustainable and borrower-friendly revenue model.

In essence, Bank 2’s approach not only improves profitability but also reduces risk and enhances cash flow, making it a more efficient and advantageous model.

Be Alert! The 100th Monkey Phenomenon Keeps Happening in the World

The 100th Monkey phenomenon is a striking metaphor for how collective consciousness can drive rapid societal transformations. In every field, from technology to culture, there comes a moment when resistance gives way to widespread adoption. Take, for instance, the arrival of computers. Initially met with skepticism and fear of redundancy, computers have now become indispensable across industries. Similarly, tractors revolutionized agriculture, yet they were once resisted by farmers who feared they would disrupt traditional practices. These examples serve as reminders that resisting change only delays progress. The world keeps evolving, and when a tipping point is reached, even the most resistant forces must align with the flow of transformation.

Micro Global TV, as introduced by Global TV, exemplifies the emergence of a modern phenomenon destined to gain traction worldwide. This innovative concept envisions a new wave of “Resident Editors” and “Managers” who will facilitate local and global communication, enabling communities to access real-time information and opportunities. The initiative aims to harness the intellectual potential of just 0.1% of the population to act as enablers for the rest, showcasing how a small but influential group can drive significant change. As more people recognize the value of this model, the tipping point will soon arrive, leading to its widespread adoption. Just like the 100th monkey’s act of washing sweet potatoes created a ripple effect, so too will the Micro Global TV concept inspire a new era of decentralized, empowered communication.

India’s rapid progress in education and awareness underscores the need for institutions like banks to embrace these shifts. The metaphor of elephants being tied in cattle sheds is apt—restricting immense potential in outdated systems is both unsustainable and counterproductive. Banks, as facilitators of growth, must shift from a “Bankers Interest” mindset to a “Facilitators Commission” mindset, recognizing opportunities beyond conventional paradigms. By aligning themselves with transformative concepts like Micro Global TV, they can not only support innovation but also position themselves at the forefront of societal change, ensuring they move ahead with the inevitable flow of progress.

Reimagining Banking for MSMEs

Here are ways in which the banking sector can “bend a little” to better serve MSMEs:

1. Move Beyond Collateral-Based Lending

MSMEs often operate with limited physical assets, making collateral-based lending a significant barrier. Instead, banks can adopt credit scoring models powered by data analytics, which assess repayment capacity based on cash flow, and business performance. Banks can monitor the transactions as well. Recall the introduction of PoS Machines where the Branch Manager were reluctant to take it up saying a hundred reasons. They could not understand the 100^th Monkey concept as it was emerging and sweeping the way cash was removed from transactions.  

2. Micro-lending through Digital Platforms

By leveraging technology, banks can directly disburse small and microloans to MSMEs through digital platforms. This eliminates the need for intermediaries, reduces costs, and makes the loan approval process quicker and more efficient.

3. Personalized Financial Products

MSMEs operate in diverse sectors, each with its unique challenges. Banks can develop sector-specific financial products tailored to the needs of different industries, such as flexible repayment schedules for seasonal businesses or working capital loans for exporters.

4. Financial Literacy Programs

Many MSMEs lack formal knowledge of financial management. By investing in financial literacy programs, banks can empower MSMEs to make better financial decisions, ultimately reducing default rates.

5. Collaborative Ecosystems

Banks can partner with Professional training establishments like the Indian Society for NLP (ISNLP) to create ecosystems that provide training and mentorship for the people engaged in MSMEs along with financial support.

The Role of Digitization in Bridging the Gap

The advent of digital technologies offers a transformative opportunity for banks to serve MSMEs more effectively. Here’s how digitization can be a game-changer:

• Real-Time Risk Assessment: AI-powered tools can evaluate creditworthiness in real time, considering non-traditional data points like transaction history and customer feedback.
• Streamlined Loan Processing: Digital platforms can drastically reduce the time and paperwork involved in loan approvals.
• Increased Outreach: Mobile banking and online platforms can extend financial services to MSMEs in remote and rural areas, promoting financial inclusion.

The Need for an External Ecosystem

While banks can and should adapt, the broader MSME ecosystem also requires strengthening. This calls for the creation of an external management, facilitation, and mentoring system that complements banking services. Such a system would provide MSMEs with:

• Training and Capacity Building: Enhancing skills in areas like digital marketing, financial management, and compliance.
• Innovation Support: Facilitating research, development, and incubation for MSMEs to innovate and compete globally.
• Market Linkages: Connecting MSMEs with larger enterprises, government projects, and export markets.

What’s in It for Banks?

For banks, bending a little isn’t just about altruism; it’s also good business. MSMEs represent a massive untapped market, and serving this sector can lead to:

• Diversified Revenue Streams: Expanding into micro-lending and MSME financing can provide banks with new revenue sources.
• Stronger Customer Relationships: Offering tailored services fosters loyalty and long-term partnerships with MSMEs.
• Contribution to Economic Growth: Supporting MSMEs strengthens the economy, creating a virtuous cycle of prosperity that benefits everyone, including banks.

The time is ripe for the banking sector to step up and take bold, innovative steps to support MSMEs. Bending a little and adopting flexible lending practices, leveraging technology, and collaborating with stakeholders; banks can empower MSMEs to thrive in an increasingly competitive world.

The question is no longer “Can banks afford to bend?” Instead, it’s “Can the economy afford for banks not to?”

The answer lies in action. It’s time for banks, policymakers, and industry leaders to come together and reimagine the future of MSME. Support MSMEs because when MSMEs grow, the nation prospers.

A. Manimekhalai’s legacy at Union Bank of India is a professional success while creating a meaningful impact in the lives of individuals and communities | Global TV

NV Paulose, Chairman, Global TV +91 98441 82044

When the so-called rich and the really poor are on the two sides of a coin; then banking was more on the side of the first; they were the foremost and the rest was the leftover. Banking was lenient on the doors of corporates. Corporate social responsibility was only for the namesake. The other side of the coin was not in the picture at all. Bankers had rigid shoes when dealing with the poor.  

Banking was much like a two-way cutting of legs to fit with the clientele. When dealing with corporates, banks often cut their own legs to suit the corporates’ shoes. On the other side, the banks went on cutting the legs of the people to fit to their shoes. People were not welcomed while bankers were waiting at the doors of the corporates. We understand this is too much a generalization, but state this to present the danger that the banking sector had overcome recently.    

Leadership from visionary bankers like A. Manimekhalai has played a critical role in calming the storm that threatened to destabilize the foundations of India’s banking sector. As the Managing Director and CEO of Union Bank, she brought a balanced approach that bridged the gap between financial inclusivity and corporate responsibility. She silently made a turnaround in the banking sector.  

Her grassroots understanding of banking challenges and her ability to implement innovative solutions have not only stabilized the institution but also set a clear benchmark for the industry. In times when even the most seasoned leaders might have faltered, her leadership has exemplified practical wisdom, foresight, and a sincere commitment to serving all stakeholders equally.

While remaining flexible in corporate banking, she has made it a point to safeguard the bank’s interests, particularly in addressing defaults from many loans sanctioned and commitments undertaken. Her work in reducing non-performing assets (NPAs) and reorganizing stale loans stands as one of her most significant achievements. Perhaps the greatest testimony to her leadership is how she unified the top management, aligning them with her clear and forward-thinking vision.

On the other hand, A. Manimekhalai also expanded the bank’s reach by prioritizing enterprising individuals over just infrastructure. The focus shifted from securing assets to empowering people. Where banking once served as a mere security check, under her leadership, it has transformed into a platform for unlocking human potential. The bank now attracts energetic and enthusiastic individuals, drawn to its progressive vision.

A notable initiative that exemplifies this is Union Nari Shakti, a powerful program that not only supports women’s empowerment but also opens new avenues for social impact. Through this, Union Bank has amplified its commitment to nurturing diverse and untapped potential, proving that banking can be a catalyst for holistic growth.

Redefining Banking with Vision and Empathy

A. Manimekhalai has emerged in the evolving landscape of Indian banking as a visionary leader who is redefining the role of public sector banks. As the Managing Director and CEO of Union Bank of India, her journey from a rural banker to a pioneer of inclusive banking is a story of resilience, innovation, and a deep commitment to social responsibility.

A Journey Rooted in Resilience and Determination

Manimekhalai’s career began in 1988 with Vijaya Bank, where she faced the challenges of working in a remote rural branch, often traveling 120 kilometers daily on her two-wheeler. These early years were not just formative but transformational, teaching her invaluable lessons about leadership, respect, and financial inclusion. Competence and leadership don’t have a gender; she proved it being the only woman heading a branch far from the city for several years.

Her early experience grounded her in grassroots realities, which later became the foundation of her leadership philosophy. Banking is not about numbers but about people; she affirms. With a focus on creating opportunities for the underserved, she transformed Union Bank of India into an institution that blends tradition with modernity, balancing profitability with societal impact.

Banking Beyond Numbers: A Philosophy of Empowerment

For A. Manimekhalai, banking is more than financial transactions; it’s about transforming lives. “When you sell a home loan, you’re not just sanctioning a number; you’re fulfilling someone’s dream of owning a house,” she explains. Under her leadership, Union Bank of India will prioritize empowering individuals through their innovative programs like “Union Nari Shakti,” which can integrate collective home loans with self-financing revenue models.

This initiative allows women borrowers to convert their homes into productive assets, whether through service enterprises, rental opportunities, or co-working spaces. “Let Your Home Work for You,” will soon become a tagline for the entire banking sector in India. This encapsulates the transformative potential of banking when merged with the enthusiasm of collective women power in India.

Pioneering Initiatives: Empowering Communities

Manimekhalai’s focus on inclusive growth has led to several initiatives aimed at empowering communities. By leveraging banking as a tool for social change, she has championed women’s empowerment and financial literacy. Whether it’s through facilitating small-scale business loans or promoting financial independence for rural women, her leadership has consistently emphasized the importance of creating accessible financial solutions.

Her role in the development of Union Nari Shakti and other similar initiatives demonstrates how banking can move beyond mere transactions to become a force for good in society. These initiatives showcase her belief that banking is not just a corporate enterprise but a means of fostering economic and social change.

Digitization and Innovation: Shaping the Future of Banking

During her tenure, Manimekhalai has seamlessly integrated technology into banking operations, ushering in a new era of digital banking. Her advocacy for online loan applications and digital services has enhanced both operational efficiency and customer accessibility, particularly for underserved communities. This digitization drive not only makes banking more efficient but also democratizes access to financial services.

“Empowering people is my way of business promotion,” she says, reflecting her belief that leadership in banking is not just about achieving financial success but also about fostering inclusive growth through technology.

A Vision for India’s Future

Looking ahead, Manimekhalai envisions the Union Bank of India as a key player in India’s growth story. “The next 10 years will be India’s story,” she asserts. “As bankers, we have a critical role in creating a positive impact for our customers, our economy, and our country.” Her focus on sustainability, innovation, and inclusivity drives the bank’s strategy, which aims to support small businesses, empower women entrepreneurs, and foster financial literacy.

Manimekhalai sees the potential of banking to contribute to national development, and she believes that the future of the banking sector lies in its ability to adapt to societal changes while creating value for all stakeholders.

An Inspiration for Future Leaders

A. Manimekhalai’s leadership is a role model for aspiring professionals. Her journey, from a rural banker to the CEO of a leading public sector bank, shows the power of perseverance, vision, and the ability to turn challenges into opportunities. She exemplifies the idea that true leadership is about making a difference for shareholders and also for society as a whole. She has demonstrated that banking can be a catalyst for social and economic change. Her story encourages others to dream big, act with purpose, and lead with integrity.

A Legacy of Transformation

A. Manimekhalai’s legacy at Union Bank of India is not just about professional success but about creating a meaningful impact in the lives of individuals and communities. Her journey is an inspiring narrative that shows how banking can be both a profitable and purposeful endeavour while empowering people, fostering inclusivity, and shaping the future of India’s banking landscape.

The Making of a Leader: A Journey Through the Banking Ecosystem

Ms. A. Manimekhalai’s remarkable journey of over three decades in the banking sector speaks about her dedication, vision, and innovative thinking. From her humble beginnings as an Officer in the erstwhile Vijaya Bank in 1988 to her current position as Managing Director and CEO of Union Bank of India since June 3, 2022, her career reflects a constant and consistent pursuit of excellence. Her ability to rise through the ranks of various banks serving as Branch Head, Regional Head, and functional head at various levels highlights her versatile leadership and her capacity to adapt to evolving challenges in the banking industry.

Her tenure at Canara Bank as Executive Director was a transformative phase where she spearheaded critical functions such as strategic planning, credit management, marketing, and financial inclusion. Notably, she played an instrumental role in the successful amalgamation of Canara Bank and Syndicate Bank, a process that demanded meticulous planning, stakeholder engagement, and a clear vision for a unified future.

An Architect in Policymaking and Governance

Ms. Manimekhalai’s contributions extend far beyond operational leadership, as she has been actively involved in shaping policies for the banking sector. Her participation in various committees and working groups set up by the Government of India has left an indelible mark on key areas such as financial inclusion, agriculture value-chain finance, rural banking, and credit facilitation for the healthcare and education sectors. Her insights have been instrumental in drawing the roadmap for Regional Rural Banks (RRBs), addressing challenges faced by Banking Correspondents, and creating innovative credit solutions.

Her leadership roles as Chairperson of Union Bank of India (U.K.) Ltd and Director on the Boards of prominent organizations such as Union Asset Management Co. and India Infrastructure Finance Co. Ltd further underscore her ability to balance corporate governance with a developmental agenda.

A Blend of Academic Excellence and Professional Expertise

Ms. Manimekhalai’s academic background complements her professional accomplishments. With a Master’s in Business Administration (Marketing) from Bangalore University and a Diploma in Human Resource Management from Narsee Monjee Institute of Management Studies, Mumbai, she brings a strong foundation of strategic thinking and people management to her leadership roles. Her status as a Certified Associate of the Indian Institute of Bankers (CAIIB) and participation in executive development programs at prestigious institutes reflect her commitment to continuous learning and professional growth.

A Visionary Redefining Inclusive Banking

What sets Ms. Manimekhalai apart is her ability to blend technical expertise with a human-centric approach to banking. Her initiatives have consistently focused on empowering individuals and communities while maintaining the financial health of the institutions she leads. Her comprehensive understanding of strategic planning, compliance, and internal controls ensures that Union Bank of India not only adapts to the rapidly evolving banking landscape but also leads it with a forward-thinking approach.

Ms. Manimekhalai’s career exemplifies how strong leadership, guided by a commitment to inclusivity and innovation, can transform not just an organization but an entire sector. Her journey from a rural banker to a pioneering leader in Indian banking is an inspiring story and a roadmap for aspiring professionals to follow.