Sharp rise in SME lending in Telangana, on a revival path

Institutional lending to the micro, small and medium enterprises in Telangana saw a sharp rise in 2015-16, signalling a turnaround in SMEs that was bogged down by problems of power supply and operational losses until last year.

Banks disbursed Rs 17,007 crore loans to the SME segment in last financial year, which is 161% higher, compared to just Rs 6,507 crore lent in the previous year, helping the bankers to surpass the priority sector targets. The banks have disbursed Rs 3,673.65 crore to a little over 4 lakh beneficiaries under the Pradhan Mantri Mudra Yojana scheme.

"Two-three things have helped the SMEs in the past one year. A number of start-ups and existing units have started expanding their operations owing to a very encouraging policy environment in the state. Dramatic improvement in power supply situation also made a big difference here. Small businesses were able to access bank lending due to Central schemes like Mudra," Ravindra Modi, senior vice-president of Federation of Telangana and Andhra Pradesh Chambers of Commerce and Industry, told Business Standard.

According to him, the Goods and Services Tax (GST) rollout is expected to give a further boost to the SME sector in the state as tax rates on some of the products here were higher than that in the neighbouring states.

Expecting a further revival in demand from various sectors, the state-level bankers committee (SLBC), headed by the State Bank of Hyderabad (SBH), had drawn the annual credit plan for 2016-17 with 25% percent higher outlay at Rs 90,777 crore as compared with Rs 72119 crore in the last financial year.

Of this, priority sector lending targets have been fixed at Rs 60,613 crore and in that Rs 41,013 crore was earmarked for agriculture sector alone.

In the year 2015-16, total advances by the banks grew 10.02% at Rs 3,89,653.32 crore, while deposits have increased by 8.9% to Rs 3,57,318.55 crore, registering a credit deposit (CD) ratio at 109.05%, one of the highest in the country.