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SBI to adopt cluster financing model for SMEs

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CIOL Bureau
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BANGALORE, INDIA: State Bank of India (SBI), the biggest lender, will adopt the cluster financing approach from the next financial year 2011-12 with an aim to support the emerging small and medium sector enterprises (SMEs) in the country, according to a news report by The Financial Express.

The newspaper quoted Manas Kumar Nag, chairman and GM and head-SME, SBI, saying, “In the next financial year we would also like to increase our customer base by providing relationship banking to smaller SMEs.”

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He added that SBI is recording 21 per cent credit growth in SME funding during the year. The bank has a system of credit risk assessment for loans above Rs 25 lakh and it charges interest accordingly. Cluster financing is the Chinese model, that boosts up the SMEs for export purpose.

The bank is looking to develop multiple SME centers across the country. SBI at present has over 1.35 million customers, along with Rs 20,000 crore exposure in the SME segment.