Bankers claim that in recent years the quality of SME loan book has improved and lenders have followed strict credit appraisal process in an uncertain economic environment. It has been on the rise for last three or four years, the slowdown in large corporate loan disbursement has prompted many lenders to bet big on the SME segment.
"We want to be known as the SME bank of the country.”Antu Joseph, head of SME, agri and financial inclusion businesses at Federal Bank said.
The share of SME loans in total advances has now improved to 25% from 20% a year earlier. We have seen good growth in this business and in the current financial year our expectation is around 22% rise in SME advances, Joseph added.
Although majority of the SME loan market share has been controlled by state-run lenders still now, industry analysts believe that large private lenders like HDFC Bank and Axis Bank have already stepped up efforts to accelerate growth in this business.