Action plan on SMEs likely

Bank of India (BoI) may reveal its strategy shortly to enhance its position in credit to small and medium enterprises (SMEs).

It may be recalled that BoI had appointed Boston Consulting Group (BCG) last year to study various aspects of finance to SMEs and business process re-engineering.

"BCG is likely to submit its report in a month's time. On the basis of its recommendations, the bank will take steps to enhance its presence in financing to SMEs. We believe that the large small scale sector will have to graduate to the medium and large sector. The new steps towards financing SMEs will contribute to the economy also by way of new employment generation and growth of the sector," said M Venugopalan, chairman and managing director, BoI.

BCG is studying the products and services being offered by the bank and determines their profitability. The consultant will offer its suggestions in the areas of launching new services or altering the present one.

"With technologies playing an important role in the business now we can learn that what the profitable operations for the bank are. For instance, we should be aware of the profitability in case of adequate minimum balance to be maintained when we offer value added services such as multi-branch banking to the saving account holders," said Venugopalan.

"We may opt for a new set-up or new section or new branches for financing SMEs," added Venugopalan.

He did not denied possibility of designing new products targeting at SMEs.

"We have high non-performing assets (NPAs) due to our focus on corporate financing in past days. But we have set aggressive targets to knock down our NPA levels. In SMEs also we have relatively higher NPAs in small scale sector nut we are taking necessary actions such as compromising with customer or using the legal framework," said Venugopalan.