HDFC wants to connect small businesses in India into digital banking, and has launched a new unit as part of the initiative.
Reports Thursday (June 30) said HDFC has launched SM@Bank, what it says is a full-fledged digital banking service for SMEs in the country that enables 24x7 access via mobile device or computer to financial services.
SM@Bank will coexist with HDFC's existing brick-and-mortar financial services for SMEs, reports said, and customers can chosen which format they would like to use.
According to HDFC Bank Group Head of Business Banking Aseem Dhru, the bank has about 7 percent of the SME bank lending volume in India. A climate that is increasingly supporting the rise of entrepreneurs in the country has encouraged HDFC to look at new ways to streamline access to institutional finance for these small business owners, Dhru explained in an interview with Business Standard.
While small business demand for loans may be rising, India has also seen growth within its alternative banking sector to fill that gap. Tens of millions of dollars were provided by venture capitalists to alternative SME lending startups in India just this past week, for instance.
But HDFC's decision to enhance its mobile and digital banking capabilities for SME clients is likely on the right track.
Earlier this year reports from the Reserve Bank of India found a significant rise – 82 percent – in mobile banking transaction value between September and December of last year. Analysts are attributing much of that increase to corporates.