Citigroup to double SME credit in 3 yrs

Citigroup plans to double its small and medium enterprises (SME) credit portfolio in India to $3 billion in three years.

The plan would be implemented through stepped-up presence in SME clusters for enhanced direct lending and by increasing points of presence by forging strategic alliances with other banks.

"Citigroup India is looking to double the SME balance sheet over the next three years," Sandeep Ghosh, director and business manager, commercial banking group at Citigroup India, said on the sidelines of the FICCI-IBA conference on "Global Banking: Paradigm Shift".

Citbank India's current SME balance-sheet size stands at $1.5 billion. SME business contributes around 10-15 per cent of Citibank's overall revenue from corporate and investment banking.

"The interest rates are at 1-1.5 percentage point premium compared with lending to AAA corporates," said a Citibank official.

Citibank extends credit to SMEs in 27 cities where it has branch presence. In cities where it does not have a branch, it is looking at strategic tie-ups with banks and other players.

SME as a business is categorised into two categories - one for small size corporates with turnover up to Rs 200 crore and second comprising enterprises with turnover in excess of Rs 200 crore and up to Rs 600 crore.

"SME banking contributes 38 per cent of (Citigroup's) wholesale banking wallet in India, estimated at $5.2 billion. It is considered to be the largest and fastest growing segment," said Sandeep Ghosh.

The growth in SME business would be supported by increasing the number of employees. At present, over 400 people are part of SME business and Citibank may double the team strength as and when required, Ghosh said.

The group has formed separate teams for sales and risk management as it helps to spot emerging risks owing to various macro and micro factors.

If corporate banking is to grow at a CAGR of 15-20 per cent, it is not possible without an increase in exposure to SMEs.