Lending to small business is safe bet now, say bankers
HYDERABAD, MARCH 13:
Many banks are coming up with special schemes and programmes to step up lending to the micro, small and medium enterprises (MSMEs) sector.
Banks feel such small ticket loans will be safer in terms of repayment compared to large corporate sector loans.
“We have declared the year 2013-14 as the MSME Year and are hoping to achieve 60 per cent credit growth under this portfolio,’’ M. Bhagavantha Rao, Managing Director, State Bank of Hyderabad, told Business Line.
SBH is offering MSME loans at an interest rate of 11.75 per cent which is among the lowest in the industry.
It plans to hold townhall meeting in all districts of Andhra Pradesh to attract MSME customers. According to B.A. Prabhakar, Chairman and Managing Director of Andhra Bank, banks are now focussing on MSMEs as the corporate sector is unable to absorb the available credit and also because of the revised definition of priority sector by the Reserve Bank of India.
Andhra Bank now has Rs 14,000 crore under MSME portfolio and is aiming for a 25 per cent growth during the next financial year.
It recently introduced online filing of applications and tracking of complaints.
CREDIT SCORING MODEL
“We are also introducing credit scoring model to sanction loans up to Rs 50 lakh which leaves very less scope for branch managers to reject any viable application,’’ Prabhakar said.
A credit counselling zone has also been set up to facilitate preparation of viability reports for loan restructuring plans.
“When we distribute small ticket loans, they are safer from the bank’s perspective as corporate sector has some risks now. Further, the sector also needs finance and will help drive economy,’’ M. Anjaneaya Prasad, Executive Director, Syndicate Bank, said.
With an MSME portfolio of Rs 15,000 crore, Syndicate Bank opened 59 specialised branches as part of its focus on the sector.
Many other banks are also opening up specialised branches. For instance, Punjab National Bank has 59 specialised MSME branches and 465 SME focus branches as on December, 2012.
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