SBI to rope in advisor to give push to stagnant SME Biz

Looks to grow business in on-line market place

Country's largest bank State Bank of India's is engaging advisor to give push to its near stagnant Small and Medium Enterprises (SME) business.

After stabilsing the asset quality in SME loan book, lender is preparing a blueprint to convert opportunities into business in the on-line and offline lending and farm to fork business. Bank intends to take advisor on board for same, senior SBI executive said.

SME unit, part of the National Banking Group, contributed 13.59 per cent to the bank's total loan portfolio. The outstanding SME book was Rs 1,81,473 crore in March 2015, according to analyst presentation.

SME portfolio in the bank has remained more or less stagnant over the last three years. The growth in business mainly came in from the risk mitigated products like bill discounting against letter of credit and asset backed lending and guarantees from credit guarantee fund.

SBI executive said Bank had consciously decided to shrink balance sheet finance portfolio, forming 66 per cent of SME book, to contain stress. The non-performing assets of SME segment stood at Rs 16,387 crore in March 2015, up from Rs 15,465 crore a year ago in March 2014.

SBI executive said there are significant opportunities to grow our business in a risk mitigated manner which will enable us to strengthen our leadership position in SME business. The aim is to grow share of risk mitigated loans - those loans which have securities and guarantees - from 28.51 (in March 2015) to 40 per cent by March 2016.

Bank has already put in place new delivery model to improve performance (SME) and with the economy looking up, we are expecting higher growth in SME business.

E-Commerce in India is one of the fast growing sectors of India's Digital Economy. New players have entered the market space and Business to Business & Business to Consumer to address growing demand. The transition from traditional purchasing to online purchasing is fast catching pace.

Goods e-commerce market gross merchandise value is expected to reach Rs 1,90,000 crore by 2019. Players like Snapdeal, Amazon and Flipkart already have a large seller base, and have aggressive growth plans. SBI has already inked pact with Snapdeal and Amazon.

Apart from e-commerce, the bank feels need to leverage offline market place based lending opportunities like taxi aggregators and franchises, especially in health, beauty and food segment.

According to a report by consulting firm PwC, the e-commerce market in India will touch $22 billion by the end of 2015. With this in view, banks are clearly seeing lending to SMEs in the online space as a growing opportunity.

Value Chain Business opportunity - farm to fork business -- is also growing in size with large corporates like Pepsi, ITC, Godrej, Amul etc deepening and expanding their presence in this space, SBI official said.