Taking loans difficult for MSMEs after SBI issues new directive

The State Bank of India (SBI) has directed all its associate banks to seek permission from SBI’s Mumbai office before granting credit proposals above Rs 10 crore. The move will negatively affect the MSME sector, since most MSMEs do not have an external credit rating or have a poor one. The banks have been demanding additional collateral from MSME borrowers because of ever increasing NPAs due to their exposure to sectors such as consumer loans, infrastructure, mining and telecom.

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