News
BRANCH BANKING | Staff Reporter, India
view(s)

Foreign banks to prop-up Indian SMEs

Foreign banks that today supply only 5% of India’s total lending will soon be required to provide some 40% of loans needed by small businesses and exporters.

A committee set up by the Reserve Bank of India is recommending a proposal to this effect be approved by the Indian government. The intent is to ensure credit to sectors that generate jobs.

Under the proposal, foreign banks must provide at least 32% of loans to “priority sectors” that include agriculture. Indian banks are already implementing the 40% requirement.

“This move will put pressure on the profitability and asset quality of foreign banks operating in India,” said Nitin Kumar, banking analyst at Quant Broking, a Mumbai-based brokerage.

“It is not a very profitable business and the foreign banks will struggle to meet the target.”

Thirty-seven foreign banks have a combined market share of about 5% of total lending, said the Reserve Bank, the country’s central bank.
 

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.