In an exclusive interaction with R Venkatachalam, Deputy Managing Director and Chief Credit & Risk Officer, SBI, SupportBiz finds out how this bank views the MSME segment.
What are your views on taking financial inclusion to the next level?
Financial inclusion can solve the problem of outreach of financial infrastructure to the last mile. This can solve several other challenges which our country is facing as well. According to me, the idea of inclusion in a country like India is to reach more and more people, specially those in rural areas. The people in rural areas need to be educated as to how they can be benefited from bank accounts in terms of loans, accounts and other facilities. We have 60% of our branches in rural areas. We open approximately two lakh bank accounts on a daily basis.
Where do you rate MSMEs among your bank’s priorities?
MSMEs are an integral and very important element for our bank. We intend to support MSMEs in the best possible manner. SBI has a clear and well-defined approach towards MSMEs, and we understand the issues these units face.
SBI is a pioneer in SME financing in India. As a bank, it has been playing a critical role in the overall growth and development of the SME sector. The bank has developed a wide array of products and services in order to cater to the evolving needs of the SME sector. It has over 1.3 million SME loan accounts, with a total exposure of Rs 1.63 lakh crore as of 2012. The bank has extended credit facilities to the tune of Rs. 78,170 crore to the MSME segment as of December 2011, which contributed 52% of our total SME advances.
What is the approach that SBI has taken towards SMEs?
Apart from a wide network of branches across the country which are specially focusing on SMEs, we have close to 600 specialized SME branches, focused towards enabling an effective platform for SME lending. Single-point contact through dedicated relationship managers has been put in place for MSMEs. Centralized processing cells have been created for quick turnaround time in sanction and disbursal of loans up to Rs. one crore.
For inclusive growth, a special scheme called SME Collateral-Free Loan for the MSME segment has been designed for lending under CGTMSE guarantee coverage, with liberalized terms, up to a credit limit of Rs. one crore.
What is the key requirement in order to improve the availability of credit to Indian MSMEs?
Entrepreneurs must understand the basic processes of banking. Financial literacy must prevail among MSMEs. Entrepreneurs must ensure that their financial documentation has updated information. They must have transparency in their financial transactions. Aspects like credit rating must be encouraged among SMEs.
For credit support of up to Rs. 25 lakhs, we have our own internal credit rating system.