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SBI to adopt cash-flow based lending for MSME loans up to Rs 50 million
Industry News- Sep 03,24
SBI is collaborating with multilateral development banks and large multinational banks to address these challenges.
The State Bank of India (SBI) plans to transition from collateral-based lending to a cash-flow-based approach for all micro, small, and medium enterprise (MSME) loans up to Rs 50 million, according to newly appointed Chairman C.S. Setty. Speaking at the Financing 3.0 Summit organised by the Confederation of Indian Industry (CII), Setty emphasised that this shift, supported by guarantees, will help micro enterprises grow into small and medium-sized businesses.
Setty acknowledged that inadequate formalisation and the lack of necessary skill sets to assess niche segments have hindered MSMEs' access to credit. He stressed the need for continuous innovation in corporate credit delivery, particularly in emerging areas like battery storage and hydrogen.
SBI is collaborating with multilateral development banks and large multinational banks to address these challenges. Setty noted that creating specialised verticals within universal banks is essential not only for large corporate credit but also for MSME lending.
Chief Economic Advisor V. Anantha Nageswaran and Sanjiv Bajaj, CMD, Bajaj Finserv, also highlighted the importance of invoice discounting, digital credit growth, and the development of India's corporate bond market to enhance credit access for MSMEs.
Setty concluded by stating that while banks will continue to play a significant role in credit growth, non-bank financial institutions must also participate in the corporate bond market to sustain the system's capital flow.
(Mint)
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