India's Largest PSU Lender SBI To Boost Credit Availability Limit For MSME, Plans 600 New Branches; BUY?

To enhance credit accessibility for the Micro, Small, and Medium Enterprises (MSME) sector, the State Bank of India (SBI) is set to increase the loan threshold under its instant loan scheme, 'MSME Sahaj - End to End Digital Invoice Financing.' The scheme currently offers credit limits of up to Rs 5 crore, but SBI is now planning to raise this cap to ensure smoother and more substantial credit flows to the sector.

The 'MSME Sahaj' scheme is designed to simplify the lending process, providing an end-to-end digital solution that covers everything from loan applications and documentation to the disbursement of funds within just 15 minutes, all without manual intervention. SBI Chairman CS Setty explained, "We have, last year, introduced a business rule engine-based, data-based assessment of credit limits up to Rs 5 crore. Anyone visiting our MSME branch simply needs to provide their PAN and approval to source GST data. We can approve the loan within 15-45 minutes."

One of the key objectives of this initiative is to make MSME credit more accessible, particularly for businesses that rely on informal lending. By using the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to back loans, the need for collateral is minimized. This approach not only simplifies the borrowing process but also encourages more MSME borrowers to formalize their credit needs through the banking system. "We still have a large number of MSME customers accessing informal credit. We would like to bring them into the banking fold," Setty added.

The bank's efforts to support MSMEs are part of a broader expansion strategy. Setty revealed that SBI plans to open 600 new branches across India during the current financial year, further expanding its already vast network. The aim is to increase the bank's presence in emerging areas and underserved residential colonies.

As of March 2024, SBI has an extensive branch network of 22,542 branches nationwide, supplemented by 65,000 ATMs and 85,000 business correspondents. These branches and digital touchpoints serve approximately 50 crore customers, making SBI one of the largest banking institutions in the country. "We take pride in saying that we are the banker to every Indian, and more importantly, to every Indian family," Setty said.

Beyond its expansion plans and MSME initiatives, Setty states that he is focused on transforming SBI into the best and most valued bank for all its stakeholders. "It is my endeavour to ensure that we are not just the best bank from a shareholder's perspective, but for every stakeholder - whether it be customers, shareholders, or the broader institutional framework," he emphasized.

The shares of State Bank of India (SBI) were seen trading with minor gains of 0.40% at Rs 802.75 per share as of 1 pm on the National Stock Exchange (NSE). The stock has delivered returns of nearly 40% in the last one year.