Banks pushing for supply chain finance on back of low SME bad loans

Negligible non-performing assets in the segment is a driving factor for banks

Banks are increasingly pushing for supply chain finance (SCF) due to its lower delinquency rates and easy disbursals. These include Bank of Baroda, Axis Bank and YES Bank. 

The SCF provides banks with greater opportunity for leveraging cross-selling and data analytics. “SCF is a win-win opportunity for all stakeholders in the supply chain ecosystem — the corporates, their suppliers and dealers," said J P Singh, head, small and micro enterprises (SME), Axis Bank. It links small vendors to the large corporates. This enables SMEs to access credit at a lower cost with minimal documentation and lesser collateral. 

Negligible non-performing asset