The Hindu Business Line : Public sector banks' credit flow to SMEs rises

The credit flow to the small and medium enterprises (SMEs) from public sector banks (PSBs) has recorded a significant rise as on end-September 2006 if one went by the latest data available on this front.

PSBs have shown a 26.44 per cent year-on-year growth in credit to the SMEs for the period ended September 30. This is much higher than the targeted 20 per cent year-on-year growth in credit to this sector.

Banking industry sources said that the cumulative SME credit outstanding for the 27 public sector banks stood at Rs 1,61,038.64 crore as on September 30 this year. This represented a 26.44 per cent increase over the outstanding credit level of Rs 1,27,359.49 crore as on September 30, 2005. The growth rate of outstanding credit as on September 30, 2006 over March 31, 2006 has been 7.35 per cent.

A policy package for PSBs to achieve a minimum of 20 per cent year-on-year growth in credit to SMEs was announced in Parliament on August 10, 2005. The objective was to double the flow of credit to this sector by 2009-10.

Among large PSBs, the State Bank of India's credit exposure has increased by 23.78 per cent to Rs 43,109 crore as on September 30 this year from a level of Rs 34,826 crore. Bank of India's credit outstanding to SMEs as on September 30, 2006 stood at Rs 17,658 crore, which represented a 25.68 per cent growth over Rs 14,050 crore as on September 30, 2005.

While Punjab National Bank's credit exposure to SMEs has grown year-on-year by 30.40 per cent to Rs 12,884 crore (Rs 9,880 crore), Canara Bank's outstanding credit stood at Rs 11,991 crore (Rs 9,722 crore).

Focus on agriculture

Meanwhile, the total credit flow to agriculture up to September 2006 by PSBs, private sector commercial banks, cooperative banks and regional rural banks stood at Rs 94,345.54 crore, which is about 54 per cent of the annual target of Rs 1,75,000 crore. For April-September 2005, the total credit flow to agriculture from these agencies stood at Rs 83,502.05 crore.

The credit flow from PSBs to agriculture sector during April-September 2006 stood at Rs 52,734.58 crore (Rs 47,488.96 crore in April-September 2005-06). On the other hand, credit flow from private commercial banks has slipped to Rs 7,444.46 crore from Rs 8,175.44 crore in the same period last year.

As against the target of 50 lakh new farmers to be financed during 2006-07, a total of 40.04 lakh new farmers have been financed by the banking system up to September 30 this year. Of the 40.04-lakh new farmers, the PSBs have financed 22.31 lakh, 2.05 lakh by private sector commercial banks, 8.71 lakh by regional rural banks and 6.97 lakh new farmers by cooperatives.

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