The Hindu Business Line : Steady growth in public sector banks’ SME lending

Hyderabad, Jan. 1 The small and medium enterprises (SMEs) are departing from their traditional stronghold sectors and are venturing into new areas if the trends in SME lending by some banks in 2007 are any indication to go by.

There has been greater interest to float SMEs in relatively newer sectors such as hospitality, hospitals and travel agencies in addition to the popular arenas such as textiles, fertilisers, gems and jewellery, according to bankers.

“A noticeable shift in the SME lending in the year 2007 has been the increase in applications from services sector,” Mr Kalyan Mukherjee, Executive Director, Andhra Bank, told Business Line.

“Though it is too premature to talk in number terms, we expect that services sector will form a major chunk of SMEs down the line,” he said.

According to Mr Amitabha Guha, Managing Director, State Bank of Hyderabad (SBH), the year 2007 had steered clear of some confusion in the operating staff of many a bank due to revision in the definition of micro, small and medium enterprises (MSME) as per the MSMED Act, 2006.

“The concept and guidelines on lending to MSME have now been well perceived and the banks have been working towards achievement of the goal of doubling the SME credit flow to SMEs by March 2010,” he said.

SBH has also formulated a policy for lending to SMEs by fixing targets to achieve a minimum of 20 per cent growth per year so as to double the SME advances from Rs 2,588.59 crore as on March 2005 to around Rs 5,200 crore by March 2010.

“We are conducting a SME credit campaign from December 10, 2007 to January 11, 2008 to mobilise new SME advances of Rs 1,000 crore,” Mr Guha said.

Further, the growth in SME lending has been broadly on the desired lines. As on November 2007, the SME lending of SBH was at Rs 4,339.21 crore compared with Rs 3,864.69 crore in March 2007. “The growth rate was at 12.28 per cent up to November 2007. We are confident of 20 per cent growth by the end of current fiscal,” the SBH Managing Director said.

Andhra Bank’s SME lending has gone up from Rs 3,250 crore in March 2007 to Rs 3,664 crore in September 2007. “We are targeting to lend Rs 3,900 crore by the end of the current fiscal, which marks over 20 per cent growth,” Mr Mukherjee said.

Mangalore-based Corporation Bank is also on its way to clock a 26 per cent increase in SME lending this year, its Chairman and Managing Director, Mr B. Sambamurthy, said. On the non-performing assets (NPAs) front, the percentage of gross NPAs to total advances is “comfortable”.

“The percentage of gross NPAs to total advances in our SME lending was 1.23 per cent at Rs 350.83 crore,” Mr Guha said. According to Mr Sambamurthy, the NPAs in SME lending would not be an issue for quite some time as it was a sunrise sector.

Related Stories:
PSBs set to top target for SME credit
SME credit growth of public sector banks tops 25%

More Stories on : Credit Market | SSI | Public Sector Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
‘Global spending on products, services will rebound’

Rupee flat on new year holiday

Goldman, Macquarie to pick up stake in PTC India Fin

Sovereign obligations deemed more risky!

Short selling by FIIs gets RBI nod

Allahabad Bank credit rating pact

CorpBank opens 71 branches

Bonds continue to move up

Steady growth in public sector banks’ SME lending

Call rates end lower

Securitisation market set for higher growth

PSU insurers upset over new tariff norms