IIPM: Manas Kumar Nag, CGM-Small and Medium Enterprises, State Bank of India

State Bank of India (SBI), being the largest lender in India, has the benefit of a wide and deep presence in the Indian market. This also reflects in its performance with respect to extending credit towards MSMEs over the years. SBI has in fact emerged as one of the biggest contributors to meeting their financial needs in a profitable way. Manas Kumar Nag, CGM-SME, SBI talks to Bhuvnesh Talwar and shares the dynamics of the company’s SME business in further detail:

B&E: What are the major challenges faced by you in the SME space?
MN: SME borrowers require continuous support. In case of a downturn, they are more likely to be affected as was evident for textile manufacturers last year. Therefore, we need to be constantly alert to their needs and nurture them. Further, MSMEs belong to the unorganized sector and may not be in a position to provide the required financial documents. They also require technical inputs to upgrade their machinery and due to lack of this expertise, our MSMEs are often unable to successfully compete in the export market.

B&E: How much of your revenue and market share comes from SMEs?
MN: Our credit exposure to SMEs amounts to around 19.73% of the overall credit exposure of the Bank for the last fiscal year.

B&E: Any new strategies or schemes for SMEs announced or in the pipeline?
MN: Recently, we have launched a bouquet of power products for different ranges of current accounts, which will be very useful for SMEs. We are also moving onto electronic platform funding for dealers as well as vendors. We have announced very competitive interest rates in various products viz. car loans, food processing units et al.

What proportion of your credit goes under the CGMSE guarantee and how has your performance been?
MN: In terms of numbers and total amount of loans sanctioned under CGTMSE, our bank is presently at No. 1 with 22.56% by account and 20.80% by value of loans covered.

What are your major criteria to reject loans to start-ups and SMEs?
MN: We do not have specific criteria. We have an assessment system based on credit rating/credit scoring models and a defined hurdle rate, below which we don’t normally extend finance.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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