On 11th June 2024, India’s largest Public Sector Bank (PSB), The State Bank of India (SBI) has launched a new “SME Digital Business Loans” product to cater the credit requirements of Micro, Small and Medium Enterprise (MSME) sector.
- The new product will enable SBI to sanction the loan requests from MSMEs within 45 minutes.
- SBI has identified the MSMEs profits as the focal point for the bank’s growth and profitability over next 5 years.
Significance:
The new initiative eliminates the need for conventional credit underwriting and lengthy appraisal processes. It simplifies the lending process for MSME sector by making it more accessible and fast.
Key Features:
i.SBI will use data from Income Tax Return (ITR) and Goods and Services Tax (GST) returns and bank statements for credit assessment of MSMEs which will enable loan sanction decision within 10 seconds after submitting the required details, without any human intervention.
ii.SBI has waived the requirement for financial statements for loans up to Rs 50 lakh. It will rely on transaction history and GST returns for appraisal.
Point to Note:
i.SBI’s outstanding credit to MSME borrowers increased from Rs 2.67 trillion (end of March 2020) to Rs 4.33 trillion (end March 2024).
ii.Also, The Gross Non-Performing Assets (NPAs) of MSME decreased from 9.43% (March 2020) to 3.75% (March 2024).
SBI Sanctioned Rs 2,030 Crore Co-Lending Tie Up with NBFCs
The State Bank of India (SBI) has partnered with 23 Non-Banking Financial Companies (NBFCs) or Housing Finance Companies (HFCs) to expand its reach to the unserved and under-served segments in India.
- According to the SBI’s Annual Report, SBI has sanctioned loans amounting to Rs 2,030 crore to over 2.79 lakh borrowers.
- More than 2.70 lakh accounts were sanctioned loans up to Rs 3 lakh through digital mode.
Key Points:
i.SBI has launched an end-to-end digital platform for credit underwriting, sanction, disbursement and collections for NBFC co-lending.
ii.As on 31st March 2024, SBI as part of co-lending tie-up with 9 NBFCs has sanctioned loans amounting to Rs 469 crore to more than 1,000 Micro, Small and Medium Enterprise (MSME) accounts.
iii.NBFC Co-Lending Platform enable the SBI to exercise its discretion either to accept or reject its share of loans originated and sanctioned by NBFC which is further subject to Bank’s due diligence.
iv.NBFC Co-Lending platform is SBI’s first business application available on the public cloud (Amazon Web Services) and integrated using Application Programming Interface (APIs).
- SBI collaboration with YUBI reflects its support for fintech solutions.
Point to Note:
i.State Bank Operation Support Services (SBOSS), outsourcing services subsidiary of SBI, has stabilized its operation in Rural/Semi Urban (RUSU) areas.
ii.SBOSS work on a “High Tech, High Touch and Low Cost” mode has helped the SBI in sourcing more than 6.70 lakh new Kisan Credit Card (KCC) loans which amounts to over Rs 13,500 crore.
About State Bank of India(SBI):
Chairman– Dinesh Kumar Khara
Headquarters- Mumbai, Maharashtra
Tag line–“The Banker to Every Indian”
Founded in- 1st July 1955
