SBI credit rules

The State Bank of India has rolled out a new system of credit assessment for the small and medium enterprises in a bid to ease the availability of credit to the sector.

The new system will internally evaluate SMEs having a loan requirement of Rs 50 lakh and above on the basis of cash flow rather than balance sheet of the firm.

"It has started on a pilot basis where we are now shifting towards cash flow based assessment rather than conventional balance sheet based assessment. The idea is to simplify the credit flow process and fast track credit disbursement. We could even consider confessional rates if the assessment is good," said Partha Pratim Sengupta, chief general manager of the SBI, on the sidelines of a summit organised by Indian Chamber of Commerce.

The development comes at a time the SBI has recorded a 3.41 per cent year-on-year growth in SME credit nationally at the end of the January-March quarter.

Total credit to the sector was at Rs 225,153 crore as of March 31, 2017, comprising 13.83 per cent of the total advances of the bank. SME advances had comprised 14.42 per cent of total advances as of March 31, 2016.

Sengupta also expressed concern over the high non-performing asset ratio for SMEs in Bengal.

"It is worrisome that the level of NPAs in the MSME sector has touched 16 per cent. We are trying to solve the problem," he said. Data from the State Level Banker's Committee shows that the banks in Bengal were able to recover only 55 per cent of the credit demand of the sector as of March 31, 2017, which was a percentage lower than previous year.

Sengupta however said despite NPAs, the SME sector has been growing at a faster pace that large corporate.

Till March 2017, SBI accounted for around 33 per cent of all the MSME advances made in the state. The bank had extended Mudra loans amounting to Rs 1365 crore, loans under Stand-Up India and PMEGP respectively at Rs 60 crore and Rs 91 crore.

Sengupta also said that there is a need to explore regulatory and government support towards introducing different norms of NPAs for different category of industries.

State Bank of India