State Bank of India (SBI) plans to restructure about 15,000 small and medium enterprise (SME) loan accounts before the end of the financial year. This is in addition to the 26,000 accounts the country's largest bank has restructured since December.

B S Bhasin, chief general manager, banking operations, said a majority of the restructured accounts were in the auto component & garment sectors.

The Reserve Bank of India in December issued a directive asking banks to restructure loans of SMEs owing to the difficulties they were facing in the light of the slowdown. Restructuring of loans would mean an extension of the repayment period and reduction in the equated monthly installments.

Those accounts which are restructured would not be considered part of non-performing assets. Advances to SME sector account for around 25% of SBI's total portfolio. SBI has 8 lakh SME accounts with a loan portfolio of Rs 1 lakh crore. The net NPA in the SME segment currently stands at 1.5%.

"We have revised 2008-09 SME advances target downward due to the slowdown. Earlier, we were aiming at Rs 25,000 crore towards the sector, but the revised target stands at Rs 22,000 crore, reflecting a growth of 25% on year," said T S Krishnaswamy, deputy GM (SME-trade & services).

The bank's SME loan portfolio has grown by Rs 16,000 crore between April, 2008, and January.

The bank saw an offtake of Rs 2,000 crore in February and is targeting Rs 3,500-Rs 4,000 crore in March 2009. Krishnaswamy said the bank has disbursed close to Rs 200 crore through two recent schemes for SMEs.

"We have sanctioned Rs 600 crore for both schemes, of which Rs 200 crore has been disbursed."

 G Seetharaman/ DNA-Daily News & Analysis Source: 3D Syndication