SBI Launches Revolutionary Digital Business Loans for SMEs and Promises Rapid Sanctioning

In a significant move to boost small business lending, State Bank of India (SBI) unveiled its new “SME Digital Business Loans” product on Tuesday. This innovative product promises to sanction loans for small and medium enterprises (SMEs) within 45 minutes, marking a milestone in the bank’s digitalization efforts.

Focus on Growth and Profitability

SBI, the largest lender in the country, emphasized that small business lending will be the focal point of its growth and profitability strategy over the next five years. The bank’s commitment to expanding its SME portfolio is reflected in the 20 percent growth of its SME book, which reached Rs 4.33 lakh crore by the end of March 31, 2024. Additionally, the gross non-performing assets (NPAs) in the SME sector have significantly decreased to 3.75 percent from a peak of 9.43 percent in FY20.

Innovative Digital Loan Journey

The newly launched “SME Digital Business Loans” product is designed to offer SMEs a seamless digital loan experience with an end-to-end sanction turnaround time of up to 45 minutes. This initiative is seen as a significant leap forward in digitalization, leveraging the rich data footprint of MSME units in the ecosystem. By utilizing data from Income Tax Returns (ITR), in addition to GST returns and bank statements, the bank has developed a data-driven credit assessment engine capable of providing sanction decisions within 10 seconds after submitting the required details.

Broadened Credit Accessibility

To further enhance credit accessibility, SBI plans to extend the availability of these digital loans across all partner customer service points and through QR codes at outdoor touchpoints in the coming months. This strategic move aims to make financial services more accessible to small businesses, especially those in remote and underserved areas.

Simplifying the Lending Process

The digital loan product eliminates the need for traditional credit underwriting and lengthy appraisal processes, offering simplicity, speed, and accessibility. For loans up to Rs 50 lakh, SBI has waived the requirement for financial statements, relying instead on transaction history and GST returns for appraisal. This streamlined approach is expected to attract more small business owners to avail themselves of the bank’s services.

Leadership and Vision

SBI’s chairman, Dinesh Khara, highlighted the bank’s goal to provide the fastest and most intuitive lending process in the country, solidifying its position as the leading MSME lender. “By leveraging the rich data footprint of MSME units in the ecosystem, we aim to provide the fastest and most intuitive lending process, further solidifying our position as the leading MSME lender in the country,” Khara said.

Vinay Tonse, SBI’s managing director for retail banking and operations, emphasized the bank’s unique proposition to both new and existing MSME customers, ensuring an in-principle sanction within 45 minutes. This initiative aligns with SBI’s broader strategy to drive growth in the MSME sector and enhance profitability.

Industry Trends and Competition

SBI’s strategic focus on the SME sector is part of a broader industry trend, with other major players like Mahindra & Mahindra and MG Motor India also ramping up their investments in the EV sector. Mahindra & Mahindra recently announced a Rs 12,000 crore investment in its EV arm, Mahindra Electric Automobile (MEAL), highlighting the growing emphasis on sustainable and efficient mobility solutions.

Conclusion

With its innovative “SME Digital Business Loans” product, SBI is set to revolutionize the lending landscape for small businesses in India. By offering rapid loan sanctions and leveraging advanced data-driven technologies, the bank aims to support the growth and success of SMEs, driving economic development and strengthening its position as a leader in the banking sector.