Kolkata, Sep 16 (IANS): Country's largest lender State Bank of India (SBI) hopes to achieve a 12 per cent credit growth for financing Small and Medium Enterprises (SMEs) in the current fiscal, a bank official said on Friday.

"Last year, growth of credit of SMEs was flat and literally there was no growth. This year, we have been optimistic with SME credits as order book and cash flow (of SMEs) are increasing. Credit growth to them is expected to be 10-12 per cent in the current fiscal," said SBI's Managing Director (National Banking Group) Rajnish Kumar.

He said the bank internally would like to achieve 14-15 per cent SME credit growth but 12 per cent growth seemed to be most feasible.

In case of SME credits, he said the bank has been active with products such as loans against property, supply chain financing, etc.

"Overall credit growth should be 13-14 percent," Kumar said on the sidelines of an event organised by Confederation of Indian Industry (CII).

The lender is moving towards cash flow based financing instead of balance sheet based financing for SMEs. "To begin with, we are moving towards cash flow based financing instead of balance sheet financing, particularly, for loans up to Rs 50 crore to these enterprises," he said.

In terms of corporate lending, the "demand for loans" has been much less. "There are no major projects which consume huge capital. There are shifts in the sectors' contribution to GDP. Services sector contributes more to GDP as compared to manufacturing. Thus, the composition of credits is also shifting," he said.

On the merger of SBI associate banks with SBI, he said there would be no closure of branches but they would be re-allocated after merger. 

"Post-merger, there will be no closure of branches but there will be a need for optimisation and reallocation of branches. We are studying what will be the total number of branches after merger," he said.

There are about 23,000 branches of SBI and its associate banks.