Could you give a brief overview of the bank's activities in the field of SME lending?
The policy package announced by the government in August 2005, once again brought the focus on SMEs. A target was set that SME lending of banks as on March 31, 2005, should double in five years, with annual growth not less than 20 per cent. Against this, SBT has already been able to double the lending to SMEs by March 2007.
The bank's performance has been recognised by the Union government by conferring the Special Award for Excellence in Lending to Micro and Small Enterprises for the year 2006-07.
This recognition at the national level assumes added significance when viewed in the context of the general notion that Kerala, our main area of operation, is an industrially backward area.
The year 2007-08 brought unexpected hurdles for SMEs, especially in Kerala. High and fluctuating rubber prices affected rubber-based industries. Tourism was also affected by demolitions in some areas.
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The strengthening of the rupee worked to the disadvantage of exporters. Even in this scenario, the bank was able to achieve a growth of 26 per cent in SME lending.
What is the kind of growth you see in the coming days?
Our main area of operation is Kerala and the potential for growth is high. A dense population and high prices of land make the establishment of large industries comparatively difficult.
However, Kerala offers advantages to SMEs, like a good road network, availability of power and water, excellent communication facilities, ports, airports and skilled workforce. In addition, Kerala is a very good market for a variety of goods and services.
Kerala has, in the recent past, produced many successful entrepreneurs who can be seen as role models for the youth. We anticipate appreciable growth in SMEs, especially in the service segment.
We are also pre sent in Tamil Nadu. The state's industrial areas offer excellent potential for banking business.
Compared to the total business of the bank, how would you rate your SME lending activities?
The SME segment has regained its due importance. Against an overall growth of 15 per cent in advances in the last year, SME lending grew by 26 per cent. Again, in the period since March, 2005, when the total advances have almost doubled, SME advances have risen three times.
We continue to give thrust to this segment in view of its employment generation potential and the contribution it makes to the economy. We have five specialised SME branches in Kerala, all with ISO 9001:2000 certification. SME divisions are functioning in branches in areas having potential for SME business.
SBT is aware of the constraints faced by micro entrepreneurs in raising margin, arranging collateral security for their borrowings, and the deficiencies caused by lack of financial education and experience. Collateral free loans are extended with coverage under the credit guarantee scheme of Credit Guarantee Fund Trust for Micro and Small Enterprises.
So far we have covered 3,511 accounts and stand at the sixth position among the 47-member lending institutions in the number of accounts covered. Financing self-help groups is encouraged in view of the advantages of group synergy and peer pressure and also as an effective mechanism to minimise rural poverty.
What are the new initiatives you have undertaken in the SME segment this year?
We have always been developing new products based on market surveys and modifying existing products based on the feedback received from our customers, the general public and our branches.
When the houseboat scheme was launched, the operators were experimenting with one or two roomed boats, that too only in Alappuzha. The activity has now matured and boats with 5-6 rooms, conference halls etc. are being built.
The scheme has therefore been modified with upward revision in the limit and more branches have been authorised to lend for houseboats. he Homestays scheme was introduced last year, but the apprehension that tourist inflow will be low this year due to the epidemic prompted many to shelve their plans.
A scheme