IDBI Bank, which six years back had transformed into a universal bank, is betting big on North-East. Besides infrastructure sector, the bank has expressed its keenness to finance the region’s MSME sector.
“We will be too keen to finance all viable projects coming up in this region. I see huge potential not only of infrastructure, but also of micro and small enterprises in North-East,” said RM Malla, chairman and managing 0director of the bank.
He said the bank has a memorandum of understanding (MoU) with the Small Industries Development Bank of India (SIDBI) for joint financing of MSMEs, where the term loan component is sourced from SIDBI and working capital is funded by IDBI Bank.
“The whole objective is that one need not go to two people to get the project appraised. We are offering a joint appraisal and both documentation and credit delivery will be a very smooth process,” added SKV Srinivasan, executive director of the bank.
“In micro and small enterprises, we have both cluster- based approach and general approach. In cluster based approach, our endeavour is to identify clusters and design products,” Srinivasan said.
He said that the bank has plans to deploy business correspondents across the region to cater specifically to MSME clients and design products and offer services for them.
Further, the bank had also signed another MoU with World Resources Institute (WRI) for financing MSMEs for implementing Energy Saving Company (ESCO) projects.
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IDBI Bank is also on an expansion spree in North-East. Malla said the bank plans to open at least 7 more branches in North-East by May 2011. Presently, IDBI Bank has 10 branches in North-East and are located in Guwahati, Jorhat, Silchar, Gangtok, Shillong, Agartala, Dimapur, Aizawl and Itanagar.
The new branches will come up in Sibsagar, Dibruargh, Tinsukia, Bongaigaon, Kohima, Guwahati and one in Sikkim. The bank will also simultaneously increase its number of ATMs in North-East from present 13 to 23.
Beginning September 1, 2010, IDBI Bank waived 21 charges on savings as well as current account transactions as another means of distancing itself from competitors. Important charges that were removed were the average quarterly balance charges, ATM charges for withdrawal from any bank ATM, charges on pay orders and demand drafts, etc.
“Since we waived off charges on savings and current accounts, the response has been very good. The number of account openings has increased by more than two and half times,” Malla said. He added that the response has also been almost the same in North-East.
“Our vision is to pay highest rate of interest to its depositors and charge lowest rate of interest from borrowers and we are working on that,” Malla added.
IDBI Bank probably has the best credit-deposit (CD) ratio among all the commercial banks operating in North-East. Its CD ratio as on December, 2010 was more than 90 per cent. The total advances by the bank in the region as on December, 2010 were Rs. 1,060 as against total deposits of Rs. 1,200 crore.