Banks bet big on SMEs

Even as micro, small, medium enterprise (MSME) associations, like National Small Industries Corporation (NSIC) or Laghu Udyog Bharti, believe that credit flow to SMEs is a bottleneck in the development of this sector, most private banks claim that their MSME oriented initiatives are doing fairly well.

These banks also believe that their services for MSMEs go much beyond than just lending money.

ICICI bank, in an effort to help small and medium enterprises (SMEs) start, finance and grow their business, has started an on-line resource centre by the name of "India SME toolkit".

The website, www.india.smetoolkit.org, contains updated information and tools to enable SMEs in emerging markets learn how to increase productivity, efficiency and capacity, as well as improve their access to capital and new markets.

"We recruited people from the industry to cater to our SME clients, as it would lead to a better understanding of our clients," Sanjiv Mantri, GM ICICI, said. The bank boasts of having nearly 50,000 MSME clients.

HSBC conducts a weekly event in collaboration with local industry associations, across seven key locations in regions where they are present. "Our aim is to inform MSMEs about issues like foreign exchange risk management, credit facilities and others," Bhuvnesh Khanna, head, SME Banking division, HSBC.

"We believe the market is huge and create our products understanding the needs of these SMEs. At the same time, we also realise that time is very important. We have a committed 24 hours turnaround time for processing," Khanna added.

While ICICI gives unsecured collateral free loans to micro sized firms with a turnover or less that Rs 25 lakh, HSBC has in place unsecured overdraft facility for firms with less than Rs 3 crore turnover.

Yes Bank, another private sector bank, believes that reaching out to MSME clients is extremely important as they are 'branch centric'.

The bank currently serves MSME clients through 30 select branches located at significant SME clusters and plans to gradually increase the SME network to 60 branches across 45 cities by March next year.

The bank has specialised product proposition for entities that are liability-rich and driven by high quality services like travel agents, airline, shipping, freight forwarders, NGOs, educational institutes, societies, clubs, exporters and importers.

"We focus on key sunrise growth sectors like food & agribusiness, life-sciences, telecommunications, auto & select engineering, media & technology, infrastructure, manufacturing and textiles," Varun Tulli, president, business banking, Yes Bank said.