Banks around world failing to meet government commitments – VRL Financial News
By ECM Plus staff
ECM Plus +++ In a new damning report ‘The Best Practices In SME Banking’ released today, top financial and professional services information provider VRL has found that despite demands over commitment by banks to lend more to small-to-medium sized enterprises, in real terms, lending is in fact ‘growing at a snails’ pace’ the report states.
According to VRL’s study, in developing nations, SMEs are most underserved, with between 45 to 55 percent of them are not being served at all by banks.
VRL said that as a result, SME-related revenue opportunities have largely remained untapped. Douglas Blakey, editor of Retail Banker International said: “With SMEs representing 95 percent of registered worldwide firms, and 60 percent of global jobs, there is a crucial requirement to better support SME banking.”
VRL’s report also raises the issue of SMEs often lacking the necessary track record with banks to be forwarded the funding they desperately need, as the usual excuse is trotted out that they may be ‘appearing more risky and costly’ to serve, a situation that could be further exacerbated by the Basle III accord, seen as ‘unfriendly’ to SMEs because it positions them as a high-risk debtor group.
VRL said SMEs are usually being denied funding with very demanding collateral-based requirements not being met.
VRL said that, while governments have started to deploy initiatives to boost the growth prospects of SMEs, the report itself finds governmental intervention has yielded varying levels of success, with sometimes controversial results.
The report also said that successful national schemes are showcased where banks are lending to SMEs, as are examples of successful lending deployed in both developed and emerging markets.
For more on the report visit http://www.vrl-financial-news.com/reports.