SBI to digitise MSME lending, putting senior people to drive growth

KOLKATA: State Bank of India (SBI) is looking to re-energize its small and medium enterprise (SME) lending vertical, accounting for a ninth of its loan book, by digitizing the module and putting top people in key business pockets to acquire new customers.
SBI’s SME portfolio shrank over 7% in FY20 to Rs 2.68 lakh crore from Rs 2.89 lakh crore. About 9.5% of this portfolio turned non-performing.

The country’s biggest mass lender is also working on unveiling a pre-approved merchant loan through its Yono platform.

The bank’s managing director Arijit Basu said last week that the focus is on digitisation and using analytics as risk management tools to boost client acquisition. Also, the bank is seeking to harness digital capabilities to support existing clients that are facing stress due to the Covid-induced disruptions and reduction in repayment capacity. That is also eroding the value of their collateral assets.

“We need risk management data, we need the data on GST, income tax and so on now available digitally,” Basu said. The bank is deputing senior officers to the SME vertical in about 80 locations across India. “We are calling them clusters where the officers will be responsible for driving good SME businesses,” he said in a webinar last week.

SME borrowers account for about 11% of SBI’s Rs 24-lakh-crore loan book – and 17% of total NPAs.

SBI has already unveiled an electronic version of the Mudra Shishu loans, under which banks offer up to Rs 50,000 to micro enterprises. This helped rein in non-performing assets, chairman Rajnish Kumar had said earlier.

This pre-approved loan programme for merchants is a part of the bank’s pre-approved personal loan scheme where it has tested success over the last two years. “Precisely that is the requirement in the MSME segment,” Basu said.

MSMEs need to review their strategies to make their businesses viable, he said. Several of the small units were already under stress even before Covid-19 hit them, Basu said.