Small and Medium Enterprises (SMEs), do not get timely bank credit in India and in many regions in the world. They do not strictly conform to the various credit scores of the lending banks for evaluation. Some banks adopt a "one-size fits all" methodology for financing SME sector. It does not work well because each SME case has its own pecularities. Old generation private banks in India have been financing this sector (with significant success rate) not on the basis of mere balance sheet ratios but on valuable relationships developed over a period of time. While tangible collateral is invariably insisted upon, these banks, in a few occasions extend unsecured finance as well.

India is the fourth largest economy in the world with billion population (after US, Japan, China). The country offers an enormous market for retail banking in view of 200 million households/400 million middle class population. Banks have adopted to retail banking in view of the huge potential. Banks have not been able to carry on business in the usual way due to lack of scope at present. They look up to retail lending as a possible avenue to augment business in the current context. Hence, all the Public Sector Banks, new and old Private Sector Banks as well as Foreign Banks focus on personal banking.

Furthermore, the percentage of NPA is also more in respect of advances to traditional sectors-like industry, commerce, project financing etc. There has been poor demand for credit in the last few years. Banks are flush with funds. The scope for investment is also very limited on account of poor returns. The security market is weak and inactive-not many new projects have been commissioned in the last few years and there are no public issues worth the name.

SME Lending: Gaining Momentum, Small and Medium Enterprises (SMEs), bank credit, financing SME sector, retail banking, Public Sector Banks, Private Sector Banks, Foreign Banks, personal banking, NPA, industry, commerce, project financing, funds, investment, security market, public issues.