HDFC Bank Launches SME Bank, To Provide Digital Services


July 01, 2016:  With state-run banks deserting HDFC Bank due to mounting bad loans, it is turning aggressive in the SME space.The private sector lender has launched an SME Bank which will provide full-fledged digital banking service to small and medium sector enterprises.

Banking facilities such as forward currency outward remittances, import bill under collection, besides viewing credit lines with the bank and outstanding amount can be availed by SME’s.

The hassles of visiting a branch can be avoided by  uploading stock statements, insurance financials. The bank, which holds 7% of the total SME lending market share, is expecting it to grow at 30% every year. HDFC Bank currently works with over 100 thousand SMEs, and plans to convert 60% of their total transactions digital in the next one year. On an average, a single SME uses 200-300 cheque leaves every month, as per the bank.

“We want our current clients to experience this new service because one happy client will get us 5 more,” Aseem Dhru, Group Head -Business Banking, HDFC Bank, said. “With this latest innovation, SMEs can do transactions like letter of credit, bank guarantees from their office.”
There are over 3.6 crore SMEs in the country which contribute over 8% to India’s GDP. The SME sector which employs over 8 crore people contributes 45% to India’s manufacturing output and 40% to the country’s exports, data from SME Chamber of India showed. Despite this, many SMEs still remain unbanked.
“The challenge remains that how we make aware a client that such a proposition exists. But, we have significantly cut the need for an SME to walk into a bank branch with a business proposal,” Dhru  said.
With SMEs growing between 8% and 15%, the bank also expects significant rise in its transactions and revenue every year.