SBI to have dedicated SME branches to raise coverage

The nation's largest lender State Bank of India, which is flush with liquidity as large corporates are holding back investments, is focusing on increasing its SME loan book by opening dedicated branches across the country.

'Earlier, we had sourcing teams and branches for SMEs, and sanction was done after being appraised by the SME city credit cell, that is a factory concept. But we have found that there is a lack of ownership in such a business model, so, we are now getting dedicated SME branches that will only do SME advances,' SBI Chairperson Arundhati Bhattacharya said.

Banks have been witnessing rising number of defaults from large corporates, especially from the infra space, as the economy has been moribund for almost three years now, while the system as whole has not been reporting rising defaults from SMEs.

The bank has already done pilot projects in Mumbai and Delhi and will soon roll out in other parts.

The bank's SME advances declined marginally to Rs 1,73,010 crore in the June quarter from Rs 1,75,407 crore a year ago, while gross advances rose 12.52 per cent to Rs 12,32,288 crore in the quarter from Rs 10,95,145 crore a year ago.

Bhattacharya said under the new model, the people who source the loans will not only appraise them, but will also be responsible for post sanction monitoring.

'So, they will be responsible end-to-end,' she added. The quality control of the loan given to the SMEs will be done by the SME credit cell.

Besides, the bank has also formed an off-site inspection team, which will do an online audit of the sanctions on an almost realtime basis so as to ensure that the loan is not manipulated, she added.

'The sanction terms and the proposals will be uploaded and off-site inspection team will audit it and will come back if they see any lacunae in that,' the chairman said.

Under the new model, the bank will not open new SME-focused branches but will convert few of its branches into pure SME branches.

'Certain branches will be converted so that they become pure SME branches and other jobs that were being done there, those will get migrated to closeby branches,' she said.

Net profit inched up 3.33 percent to Rs 3,349 crore in the June quarter from Rs 3,241 crore a 

year ago, while gross NPAs declined 66 basis points to 4.90 per cent.