Confirming the development, a senior SBI official said: "We are increasing our exposure to consumer finance, and are targeting the middle class. This is because, unlike corporate loans, the consumer-finance business carries lesser risk coupled with reasonable returns owing to lower incidence of defaults. In fact, the gross non-performing assets of SBI's personal-banking portfolio are lesser than 1 per cent of the advances made to this sector." Banking sources say that over the past year, State Bank's consumer loans portfoilio has grown from Rs 6,461 crore to almost Rs 8,000 crore on the strength of more than 30 lakh loan accounts (his has also registered an almost 17per cent growth from its last year levels of around 26 lakh loan accounts).

"SBI will have a distinct head-start over its competitors because it will be able to penetrate the domestic consumer loans market through its innovative products, aggressive distribution strategies, and a 14,000-strong branch network in the country," the official said.

The sources add that in the retail segment, SBI is offering many products, which include its "consumer-finance scheme" to provide loans for consumer durables (it offers a minimum loan of Rs 10,000 and a maximum of Rs 2 lakh, which can be repaid within three to five years), along with the car-loan scheme designed to provide loans for purchasing vehicles, including second-hand ones (not more than three years old). As per the scheme, repayments for new vehicles have to be made before 84 months, and not more than 60 months for old vehicles.