Shyam Maheshwari SSG on addressing the state-owned banking systems

• 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. He has 17 years of experience in the deal sourcing, analysis and investing industry. Shyam Maheshwari SSG studied at St. Xavier’s College, Mumbai for his graduation and Indian Institute of Management Bangalore for his post graduate MBA. Shyam Maheshwari share his perspective on the evolving global credit landscape to identify pockets of opportunity across the broad spectrum of credit.

Shyam Maheshwari is a Founder and Partner at ARES SSG

• The world’s central banks have been a major boon to investors as they’ve pumped unprecedented amounts of liquidity into the global financial system since the 2008 crash. This has allowed many companies to push out maturities and save on interest expenses. On the flip-side, investors have been pushed into riskier assets and as new, but sometimes less experienced competitors, such as corporations backed by large balance sheets, have entered the market. 

• Shyam Maheshwari on addressing the state-owned banking systems, told that as they are policy statement of the governments, they maybe defensive today because the balance sheet looks heavy on the NPL and maybe not reflective in China yet. But on the other hand, Maheshwari believes that as economic recovery kind of comes back, the bank balance sheet will be becoming healthier with the more injection from the government as they can afford various stages of the revolution. This will be carried out effectively because it is policy driven and it infuses into the growth, Maheshwari explains.

• According to Shyam Maheshwari SSG, the capex cycle is not driven by the banking system than the alternative. In his words, “the non-bank, or the alternative bank have to remain alternative and cannot come into main stream, but so far as of now there is an opportunity of next 3, 4 or 5 years where the incremental growth will be in the non-banks than the bank and this is an opportunity”. As per his views in China, there has been haves and have nots regarding credit. “Some people get credit even though there is decent liquidity and some sectors and some companies don’t get credit. While in India for sure it is a micro issue where the banks are not lending at all and therefore any growth opportunity by acquisition, growth or capex has to be funded from the non-bank for the time being”, Maheshwari details.

• Talking about funding given to corporates, Shyam Maheshwari SSG thinks that it is all about statistics. He explains that when it is granular and similar, it works but when it becomes large and bespoke, it won’t. Individual large corporates which cannot get funding from platforms is because size will be too difficult to absorb and the analytics of automation won’t work. He sees that granular and small lending works fine but not large lending or large loans.

• According to Shyam Maheshwari, in India there is a demand for credit but it is self-fulfilling because there is a demand for credit and there is a demand for growth. And that part is currently on top of bank lending which again currently is being fulfilled by trust loans or alternative lenders or financial companies.

• Shyam Maheshwari expects that it will normalize. The banking sector, because they are government owned, will remain the Bedrock for the capex cycle. Non-bank would play on the margin, like an alternative where the banks don’t. This includes consumers, real estate, regulatory issues on various sectors and policy changes as they come along the way. Shyam Maheshwari affirms that growth for both these sectors is definitely visible and that is something that is definitely different from Europe or the US.