SME banking sector in India full of challenges

Mumbai, Sep 27: The Small and Medium sector Enterprises (SME) banking in India is full of challenges, said Sandeep Ghosh, Managing Director and Head (Commercial Banking Group), Citi Group India here today.

He said this while addressing the second day of the three-day conference on Global Banking: Paradigm Shift 'Towards meeting the emerging challenges' here, jointly held by Federation of Indian Chamber of Commerce and Industry (FICCI) and Indian Banking Association (IBA).

He said the most striking among them being how to develop a profitable, predictable and scalable business model.

He said the SME banking was faced with high origination costs and hence suggested for acquiring a large number of small accounts.

Mr Ghosh advised for finding the appropriate risk reward balance to come over the problem. Some of the other suggestions made by him include need for customised products and demand-driven services.

Talking about the new areas in SME business banking, State Bank of India General Manager-SME J Chandrasekharan said that carbon credits were the new areas in the field.

The origin for carbon credits lies in Kyoto Protocol that asks the industrialised countries to reduce their collective emissions of greenhouse gases by 5.2 per cent as compared to 1990, he said.

He predicted that the global market size of the carbon credits between 2008 and 2012 was tipped to reach USD 30 billion.

The EcoSecurities Plc, one of the world's leading originators of carbon credit projects, has opened an office in the country and it was concentrating on SME sector which contributes 50 per cent to the country's GDP, he informed.

UNI