How SBI Project Vivek has given SMEs a leg-up in drive to clear loans

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Published: September 23, 2017 4:36:32 AM

State Bank of India (SBI) has automated the process of carrying out due diligence for loans to small and medium enterprises (SMEs) under what the bank calls Project Vivek, sources told FE.

SBI, SME, Project VivekState Bank of India (SBI) has automated the process of carrying out due diligence for loans to small and medium enterprises (SMEs) under what the bank calls Project Vivek, sources told FE.(Image: IE)

State Bank of India (SBI) has automated the process of carrying out due diligence for loans to small and medium enterprises (SMEs) under what the bank calls Project Vivek, sources told FE. “We have moved to a system of lending based on cash flows rather than the balance sheets,” a senior banker said, adding that SBI now collects the statements of all bank accounts of an applicant in order to assess their cash-flow situation. The statements are then put through a software which analyses the documents. The lender also launched a one-time settlement scheme (OTS) on August 8 for loans under Rs 20 lakh which had turned bad as on March 31, 2016.

Around 27 lakh borrowers would qualify for the scheme, the banker said. SBI expects to contain retail non-performing assets (NPAs) at their June levels in the September quarter and reduce them to their March 2017 levels by December. As on June 30, the bank’s retail NPA ratio stood at 1.56%, while the agri NPA ratio was 9.51%. On March 31 – prior to the bank’s associates being merged with it – retail and agri NPAs constituted 0.55% and 5.53% of the loan book, respectively. A majority of the bank’s slippages in the quarter ended June – R17,886 crore – originated from the national banking group (NBG), which houses its retail and agri loans.

Chairman Arundhati Bhattacharya had attributed the slippages to an inability to effectively follow up retail loans in the wake of the bank’s merger with its associates. “While we had rationalised our accounts of up to R50 crore with the subsidiaries, this had not been done for accounts below R50 crore and for the personal book,” she had said after announcing results for the June quarter. “This is the book we have now aligned with ourselves and that has caused the retail slippage.”

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