Shyam Maheshwari is a Founder and Partner at ARES SSG. He is also an Associate Member at The Institute of Chartered Accountants of India and on the board of various companies. Previously, Shyam Maheshwari served as a Senior Member of the Lehman Brothers Asia Special Situations Group primarily responsible for making principal investments in India, where he oversaw the efforts to build the Indian business and initiated pan-Asian ventures in mining and power assets with a focus on Indonesia.
According to Shyam Maheshwari, 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.
Shyam Maheshwari describes the Indian credit market and how it is dominated by private lenders. The Indian credit market has been dominated by banks and non-bank financial companies for a long period. It started with the primary dominance of PSU banks then the private sector banks came along. 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 would probably increase initially and the need for credit is very much out there. The challenges the banks and non-banks as you have 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.
Shyam Maheshwari SSG thinks that taking what he said on the flexibility, also emanates from the regulated players which have been dominating the market for a long time whether it is a bank or a non-bank. One is regulated and the second is leveraged. The leverage platforms have certain constraints which were shown when IFS has happened in terms of whether it is LLM or it is provisioning norms. Shyam Maheswari points out that there is creditor protection which is increasing and improving over time. He affirms that the access to the market remains open and is undergoing improvement but still a lot could be done. “It is pretty encouraging to see the signs that it has been opening up in the last decade or so”, says Shyam Maheshwari.
Shyam Maheshwari also points out that there had been certain comfort for the investors from the global perspective because there is an IBC process in place. Creditor protection is increasing and improving over time. He also identifies that the access to the market remains open and improving. A lot could be done in the form of access, which is currently only available to the foreign participant in form of either ECB in dollar terms or in rupee bond market which has certain nuances and constraints at this point. However, Shyam Maheshwari is excited that it is pretty encouraging to see the signs that has been opening up in the last decade or so.
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