SBI will focus on lending to MSMEs, says chairman

MUMBAI: SBI chairman Rajnish Kumar said that the lender, which until now was chasing home loans because of the security they offered, is shifting focus to micro, small and medium enterprises (

MSMEs

). The availability of data and technology in the form of analytics has made it easier to automate lending decisions to the sector, which until now posed challenges.


“For the bank, housing loan had become the most popular product as it was safe to lend. I am now shifting focus. We appointed 90 deputy general managers across the country, whose primary focus is MSMEs,” said Kumar at an online CII event on small and medium enterprises on Saturday.

The SBI chief said while there had been some hesitancy to lend to the sector, it was because of the experience of loans going bad. However, technology had now made it much easier to lend, he said. The SBI chief’s statements come at a time when the government is going all out to reduce the pain in the MSME segment due to the lockdown. The government has agreed to guarantee an additional 20% credit limit to MSMEs, provide them with risk capital. It is also pushing banks to do more.

Kumar said due to the availability of data on GST, borrowers’ credit history and income tax, it was possible to automate lending to small businesses. “We have recently given Rs 200 crore of e-Mudra loans through end-to-end digitisation,” said Kumar. “Use of technology in lending and the availability of data is helping banks underwrite loans on a more scientific basis. SBI has sanctioned more than 4 lakh loans a month, thanks to technology,” said Kumar. Highlighting Germany’s experience, Kumar said that MSMEs can be drivers of an economy.

Speaking at the same event,

Kotak Mahindra Bank

VC &

CEO Uday Kotak

said that private banks have taken longer in disbursing loans under the government guarantee scheme, but the numbers would pick up soon. He also highlighted the need for MSMEs to raise risk capital from any route to enable them to withstand shocks from a sudden change in the external environment.

“In view of the revision in turnover limit for MSMEs from Rs 100 crore to Rs 250 crore, the eligibility conditions for the government guarantee scheme should also be relaxed similarly, and CII would be taking this suggestion to the government,” said Kotak.

According to the SBI chief, the new definition of MSMEs, which includes both turnover and investment limits, has also made it easier to lend to the sector. Industry representatives have meanwhile made a representation to banks seeking to revise the eligibility for the government guarantee scheme in line with the new definition of MSME.