The plight of small and medium-sized enterprises unable to secure bank financing has been voiced time and time again ("SME business woes made worse by credit crunch"; Wednesday).

Singapore's Ministry of Trade and Industry defines SMEs as companies with annual sales under $100 million and under 200 employees.

Many commercial banks have their own SME lending units but may vary in their definition of what qualifies as an SME and operate with different lending criteria; all have more stringent credit guidelines for SMEs than when lending to larger corporations.

With some 200,000 enterprises here - 80 per cent of which are locally owned SMEs - I believe the majority of these SMEs have little access to "meaningful" credit facilities from commercial banks, which dampens their opportunities for faster business growth.

Given the economic importance of SMEs to Singapore, perhaps it is time to consider setting up a dedicated SME bank that is owned substantially by the Government and, possibly, the major local banks too.

This specialised SME bank could have a tiered lending strategy to cater for different categories of SMEs, for instance, those with sales of up to $20 million, $50 million and $100 million.

A specialised SME bank could hire specialist lending officers to target, groom and expand their SME client base.

This is a task which requires a more careful and time-consuming approach to lending that can only come from a bank's thorough and intimate knowledge of an SME's business.

SMEs also pay higher costs for their borrowings so the time spent on account management by a specialised SME bank could be justified and will also reduce the chances of a loan default.

The above idea is not new.

When Singapore was a young nation, we had the Development Bank of Singapore to provide development financing for young enterprises.

We now need to tweak our banking model to suit the current circumstances so as to guarantee the success of our budding enterprises and the future of our country.

Raymond Koh Bock Swi