OPINION

SBI: The Pioneer in MSME Finance

State Bank of India is the pioneer and market leader in financing MSMEs, serving more than 14 lakh MSME borrowers in the largest core banking platform 

Micro, Small and Medium Enterprises (MSMEs) are vital for India’s economic ascension. The contribution of MSMEs to GDP, employment creation and export has been significant necessitating a slew of measures being announced by policy-makers from time to time to develop MSME ecosystem for growth and viability of MSME units. State Bank of India (SBI) is the pioneer and market leader in financing MSMEs, serving more than 14 lakh MSME borrowers in the largest core banking platform. The MSME business had a loan portfolio of approximately `1,92,120 crore as on March 31, 2019. The bank’s approach in driving MSME portfolio growth rests on strong pillars of customer convenience, risk mitigation and technology-based digital offerings and process improvements making our contribution sustainable, continuous and flourishing.

SBI has leveraged on the various opportunities put forward by the government through their initiatives like Make in India, CGTMSE cover, Mudra, Stand-up India, formalization of this sector on GST regime, 2 per cent interest subvention to GST registered MSMEs, etc. to contribute significantly in developing the MSME ecosystem as well as create a bouquet of MSME products offering customization of the credit requirement of different sectors of MSME units. Our achievement in Mudra has been `33,612 crore for FY 2019 against a target of `33,550 crore. CGTMSE portfolio as on March 31, 2019 is `7,830 crore.

State Bank of India was awarded ‘Best MSME Bank Award-Large Bank’ by CIMSME and the “Noteworthy lender to MSE Award” by SIDBI-ET. It is the first bank which signed a Memorandum of Understanding (MoU) with Quality Council of India on the Zero Defect Zero Effect (ZED) Certification Scheme of the Ministry of Micro, Small and Medium Enterprises. Products and services offered specifically to MSMEs include term loans, working capital loans, standby lines of credit, bank guarantees, letters of credit, export finance, various types of current accounts and transaction related products. Some of the banks digital initiatives in catering to MSMEs through effective and efficient credit delivery channel are:

Contactless Lending Platform (CLP) for loans above `10 lakhs to `100 lakhs. The main purpose of the CLP was to make the process of sanctioning loans easier to MSME customers using technology and data analytics. The platform is using analytics and algorithms to carry out the checks and arriving at an eligible loan amount and an in-principle sanction is provided to MSME units. On this platform, 8,337 in-principal sanctions were generated through CLP by fiscal 2019 amounting to `32.50 crore. Project Vivek: SBI has heralded paradigm shift in the appraisal system from traditional balance sheet method to a more objective based cash flow system. The improved credit underwriting engine will bring objectivity in better risk assessment and reduce turnaround time. E-Commerce: The exponential growth in e-commerce has opened a world of opportunities for micro, small and medium enterprises. New players have entered the market space and Business to Business (B2B) & Business to Customer (B2C) space is growing in demand. The bank has gained first mover advantage in this area, working on various initiatives to pioneer ecosystem lending through partnerships with new business models. The bank has entered into tie-ups with major e-commerce players such as Amazon and Flipkart to leverage the partnership for the growth in MSE loans.

Supply Chain Finance Unit: This unit provides a user-friendly, end-to-end Internet banking platform for the funding needs of dealers of industry majors under the Electronic Dealer Financing Scheme (e- DFS) and an end-to-end Internet banking platform for the funding needs of vendors of industry majors under Electronic Vendor Financing Scheme. The bank has so far financed more than 42,493 dealers and vendors through tie-ups with more than 351 industry majors. The number of oil dealers (petrol pumps) on e-DFS crossed 14,806 during the last fiscal. Agri Supply Chain Finance: Commodity Backed Warehouse Receipt Financing— The bank extends finance to traders/manufacturers against goods stored in their warehouses. The WHR portfolio as on March 31, 2019 stands at `6,111 crore. Trade Receivables Discounting System (TReDS): It is an online platform to provide financing to MSMEs through discounting their receivables from the large corporates, public sector undertakings and government departments, which alleviates the problem of inadequate and expensive finance to MSMEs. The bank has boarded on all the three TReDS platforms, A.TReDS, RXIL (Receivable Exchange of India Ltd) and M-One (Mynd-Online National Exchange) to finance MSMEs at competitive rates.

The bank also offers robust Internet banking facilities to SMEs. Customized Products: To cater to the specific needs of its clients, the bank has devised customized products for the MSMEs as follows: Doctor Plus Scheme to meet funding requirements of medical practitioners for equipment, clinic or nursing home. SBI Medical Equipment Finance to provide term loans for purchase of medical equipment and funding for ancillary equipment. SME Construction Equipment Loan to provide loans for purchase of construction equipment for contractors or firms engaged in construction activity. Dal Mill Plus Scheme to provide loans for acquisition of fixed assets and working capital needs for dal millers. SBI Fleet Finance Scheme to provide loans for purchase of new transport vehicles. Open Term Loan which is a pre-approved term loan facility for both manufacturing and service sector enterprises for capital and business development expenditure. The bank is extending collateral free lending of up to `2 crore under the credit guarantee scheme of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). The bank offers technical and managerial assistance to SMEs through its consultancy services cell. Cluster Finance Approach: Based on the potential of the select activities in the geographical area, clusters are identified and our SME intensive branches in particular cater to the financing needs of these clusters. Based on the cluster studies conducted, separate lending packages are being developed for each cluster.

OUR NEW INITIATIVE

Bharat Nirman Campaign: To propel the existing momentum of credit disposal to MSME sector, SBI has launched a campaign Bharat Nirman Abhiyan for onboarding MSME units through district level Udyog and Karobar Camp making use of our strength of technological and physical outreach. This campaign has vision of complementing the government’s Support and Outreach Programme envisaged by Prime Minister Narendra Modi and announced on November 2, 2018, for the development of MSME ecosystem. Tie-up with NBFC/FI through Coorigination Model: To leverage on the reach of non-deposit taking NBFCs, the bank is exploring tie up with Cholamandam Finance, Edelweiss, Capri Global, India Infoline, MASS Financial Services, etc. This will help the bank to increase penetration in risk mitigated way due to co-origination arrangement entailing joint contribution of credit by both lenders. It will also involve sharing of risk and reward between the bank and NBFCs.