Union Bank of India is aiming a 35 per cent increase in advances to micro, small and medium enterprises over the last year by the end of this fiscal.
Last year, of the total advances of nearly Rs 76,000 crore, the share of the MSME sector was Rs 12,242 crore.
The bank's advances to the MSME sector presently constitute 16 per cent of its total advances, and it aims it to 20 per cent by 2012.
Speaking at a press conference in Kolkata on Tuesday, S L Bansal, general manger, Union Bank, said the bank had set a target of Rs 1 lakh crore for advances and Rs 1.3 lakh crore for deposit mobilisation for the present fiscal.
To augment lending to the MSME segment, the bank has decided to convert about 175 branches , out of a total of nearly 2,500, into specialised business banking branches, which will focus on the MSME sector. They are meant for customers in this segment with limits up to Rs 35 crore or having a turnover less than Rs 1000 crore.
Union Bank revised its benchmark prime lending rate (BPLR) by 75 basis points to 12.50 per cent. This is a further downward revision from the 75 basis point revision effected in two tranches in the month of November 2008 .
The bank has also introduced a number of products meant for financing the mid-segment industrial units for financing machinery and equipment, working capital, dealers’ purchases through buyers bills discounting and temporary requirements of MSME segment. The bank also entered into a tie-up with Sidbi for identifying and financing working capital component for those MSMEs where term finance has been extended by Sidbi. It has has also entered into an tie-up with Credit Guarantee Trust for Micro and Small Enterprises, to extend collateral free credit to MSMEs up to Rs 1 crore.