There is no further room for innovation

Rammohan, country head, SME banking of IndusInd Bank, on the prospects for the sector's growth.

What kind of growth do you see in SME credit over the next two-five time frame?

Given the thrust by the government we should see a growth of around 20 per cent in SME credit in the next two to five years.

What does IndusInd's SME portfolio look like in terms of size and sectoral exposure? How are you planning to grow it? Are there any specific products that are likely to be introduced this year?

We have portfolio of SME assets evenly distributed across all the sectors. We are planning to grow more than the anticipated industrial average growth of 20 per cent. We are not planning to launch any products specific to SMEs, as of now. Frankly, there is no innovation left unexplored in the sector.

Will the budget provisions announced by the finance minister in this in year's budget affect the growth of SMEs?

The finance minister budget announcements on SME are truly encouraging. He said he would encourage the banks to lend more and soon banks would be advised to price the SME credit in tandem with their credit ratings.

This is very positive for SME credit growth. The sector is gaining a decent growth on its own, and such an announcement would definitely add impetus to the SME credit growth. Most of the banks already have dedicated SME financing offices and henceforth, you would see more such action on SME financing.

The pricing is always a trade-off between risk and reward, and banks in general have started pricing their credit in consonance with the credit ratings, done in-house.

Some of the banks have already started giving due regard to ratings (given by rating agencies) while pricing the SME credit, the ambience, however, is still in its nascent stage.

It might take a little longer time for banks to put their money based on the judgment of a third party. More so, for SMEs where the entity governance is less regulated.