Banks to review SME exposureBanks reviewing their lending portfolios to SMEs
Apnaloan.com Research Bureau
31 Mar 2008
Banks have started reviewing their existing and possible future commercial transaction norms for Small and Medium Enterprises (SMEs), although the issue of some of them remains sub-judice.
SMEs now need to answer more questions for a simple transaction. For banks, SMEs have driven credit growth.
Earlier, SMEs had started voicing their protests as some banks had misguided them on how to invest in structured derivatives products, leading to huge losses. As a result of which banks are reviewing their lending portfolios to SMEs.
The guidelines of the Reserve Bank of India clearly state that banks are supposed to conduct a thorough due diligence on the risk profile of a company and also ask the company to get its board approval before experimenting in currency derivatives.