State Bank of India (SBI) expects loan offtake by the industry, especially small and medium enterprises (SMEs), to increase on the back of reform measures by the government. It is also hopeful that its recent action of reducing the base rate by 25 basis points to 9.75 per cent would give a push to the loan growth, said A Krishna Kumar, managing director and group executive (National Banking), SBI.
Speaking to reporters on the sidelines of its corporate social responsibility initiative here, he said, “From April to August, this year, there was a growth in loans in sectors like agriculture and retail, but borrowing was less in the SME sector. We expect the recent developments to trigger growth in the industry, resulting in more loan offtake.”
With the slowdown, even the loans sanctioned were not taken by the borrowers in the SME sector. “The decrease in borrowing is not only because of the interest rate, but also depends on the demand for the products or services from these industries in the market. If the finished products remains unsold, there would not be any requirement for more investment,” he said.
