Business Mantra News
- State Bank of India is largest Lender and largest Bank of the country and has planned to increase its lending figures to SME units with a growth rate of 10 to 12 %.
- For this SBI is planning to change policy of analyzing the borrowers capability or eligibility to get finance, formula to calculate PBF – (Permissible Bank Finance) are going to change.
- Presently all nationalized bank including SBI calculate eligibility of borrower for Working Capital or other financing by Balance Sheet based calculation.
No doubt fund flow is also prepared and analyzed.
- If for a borrowers, Balance Sheet based Analysis does not permit the desired funding them Bank does not sanction proposal despite its Cash Flow position is very good.
- But Now SBI has decided to fund Borrowers based on cash flow position also.
- With these Schemes of SBI, Borrowers with heavy investment in Plant & Machinery will get benefited as deprecation is very heavy which is a non-cash expense, so Cash Flow will be good.
- If Stock and Debtors are less due to prompt payment by customers, than Cash Flow will be good SME will have eligibility for Funding.
- If other nationalize banks follow SBI, policy them the scene of SME founding will get changed in India.