State Bank of India posts growth at the cost of MSMEs
Updated: Feb 17, 2015 04:21:39pm
New Delhi Feb 17 (KNN) Bucking the trend of lower profits and higher bad loans by public sector banks, the country’s largest lender State Bank of India posted a 30 per cent rise in net profit, at Rs 2,910 crore, in the October-December quarter.
The profit was driven by improvement in asset quality, higher non-interest income and stable corporate loan growth as claimed by the bank’s management.
However, the important thing to note is while the corporate loans grew 20 per cent during the period and retail loans rose 13 per cent, lending to the mid-corporate and small and medium sectors witnessed a marginal de-growth, a more sophisticated way of telling a decrease.
It may be recollected that the high power “Prime Minister’s Task Force for MSMEs” constituted by the UPA Government recommended 20 per cent year on year growth for credit to MSMEs. While it was never achieved by the banks, now the largest bank is showing a net decrease. We may presume the other banks will also follow the bellwether.
Federation of India Small and Medium Enterprises (FISME) President, D Gandhikumar, expressed his strong reservations about the attitude of the banks to adopt the easy route to profit through retail loans and advances to corporates.
It is the large sectors like airline which is dragging the balance sheets of banks to red, not the MSMEs who are trying their best to be loyal to the banks. While the PE funds and venture capitalists are finding the highest growth in MSMEs, our banks are still following the age old risk shy path, he rued.
He also drew the attention of the authorities to the recommendations of the KV Kamath Committee which has proposed to take MSME lending from the current level of Rs 10 lakh crore to 30 lakh crore. (KNN/DB)
The profit was driven by improvement in asset quality, higher non-interest income and stable corporate loan growth as claimed by the bank’s management.
However, the important thing to note is while the corporate loans grew 20 per cent during the period and retail loans rose 13 per cent, lending to the mid-corporate and small and medium sectors witnessed a marginal de-growth, a more sophisticated way of telling a decrease.
It may be recollected that the high power “Prime Minister’s Task Force for MSMEs” constituted by the UPA Government recommended 20 per cent year on year growth for credit to MSMEs. While it was never achieved by the banks, now the largest bank is showing a net decrease. We may presume the other banks will also follow the bellwether.
Federation of India Small and Medium Enterprises (FISME) President, D Gandhikumar, expressed his strong reservations about the attitude of the banks to adopt the easy route to profit through retail loans and advances to corporates.
It is the large sectors like airline which is dragging the balance sheets of banks to red, not the MSMEs who are trying their best to be loyal to the banks. While the PE funds and venture capitalists are finding the highest growth in MSMEs, our banks are still following the age old risk shy path, he rued.
He also drew the attention of the authorities to the recommendations of the KV Kamath Committee which has proposed to take MSME lending from the current level of Rs 10 lakh crore to 30 lakh crore. (KNN/DB)
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