The State Bank of India (SBI), the nation’s largest lender, has declared that lending to micro, small, and medium enterprises (MSMEs) will be the primary focus for growth and profitability over the next five years. On Tuesday, SBI launched an innovative product named “SME Digital Business Loans,” promising to sanction loans within 45 minutes.
In an official statement, SBI underscored that advancing MSME loans is central to its growth strategy and profitability goals over the forthcoming five-year period. The bank aims to enhance credit accessibility for small businesses by extending availability across all partner customer service point touchpoints and through QR codes at outdoor touchpoints in the near future.
The importance of this initiative is underscored by SBI’s recent performance. As of March 31, 2024, the bank’s total SME loan book increased by over 20%, reaching ₹4.33 lakh crore. Moreover, the gross non-performing assets (NPAs) in this segment significantly decreased to 3.75%, down from a peak of 9.43% in FY20. This improvement reflects SBI’s strengthened risk management and the robustness of its lending practices.
The newly launched SME Digital Business Loans product is hailed as a substantial advancement in the bank’s digitalization efforts. This offering ensures a completely digital loan journey with a sanction turnaround time of up to 45 minutes, marking a notable shift from traditional lending processes. By leveraging the extensive data footprint of MSME units within the ecosystem, SBI aims to deliver the fastest and most intuitive lending experience. This initiative is set to solidify SBI’s position as the leading MSME lender in India.
SBI Chairman Dinesh Khara emphasized that the bank’s approach is to use data footprints from various sources such as Income Tax Returns (ITR), Goods and Services Tax (GST) returns, and bank statements. This data-driven approach enables a streamlined credit assessment process, allowing sanction decisions to be made within 10 seconds after submission of the required details. For loans up to ₹50 lakh, SBI has waived the requirement for financial statements, relying instead on transaction history and GST returns for appraisal. This strategy simplifies the borrowing process, making it faster and more accessible for small businesses.
Vinay Tonse, SBI’s Managing Director for Retail Banking and Operations, highlighted the bank’s commitment to providing a unique proposition for both new and existing MSME clients. The bank guarantees in-principle loan sanction within 45 minutes, which is a significant value addition for the MSME sector, often hampered by lengthy credit underwriting and appraisal processes.
This strategic focus on MSME lending is part of SBI’s broader objective to support small businesses, which are critical to the economy’s growth and employment generation. By digitalizing the lending process and leveraging data for quick credit assessments, SBI is not only enhancing its service delivery but also fostering financial inclusion.
In conclusion, SBI’s intensified focus on MSME loans, backed by innovative digital solutions and a data-driven approach, is set to drive significant growth and profitability in the coming years. This move will also play a crucial role in supporting small businesses, ensuring they have the necessary financial resources to thrive and contribute to the broader economic development of the country.
