Bank of Maharashtra (BoM) was recently awarded the Y B Chavan Memorial Award for its support to small and medium enterprises (SMEs) in rural areas. The award was given by Maharashtra Industrial and Economic Development Association — a think tank that works with the state and Central governments in order to make Maharashtra a preferred investment destination — during the Maharashtra Economic Summit held in Mumbai last month. Allen C A Pereira, BoM’s chairman and managing director, spoke to Pravda Godbole. Edited excerpts.
What kind of support has BoM extended to SMEs in rural areas?
We established 14 branches especially for SMEs. Eighteen additional branches have also been identified for development as SME branches in the near future. Twenty-nine specialised officers with engineering backgrounds were recruited for these branches. These officers were given special in-house training and they also attended separate training sessions at the College of Agricultural Banking in Pune.
BoM has also established the Maharashtra Self-Employment Training Institute (M-SETI) in association with the government of Maharashtra. Since 2001 it has trained 4,605 unemployed youths and helped them acquire skills for self-employment in rural regions. Gramin Mahila and Balak Vikas Mandal, a trust formed by BoM and the National Institute of Bank Management, continues to concentrate on formation, nurturing and training of self-help groups (SHGs) and ensuring credit linkages for them.
How will concentration on SHGs help SMEs?
This initiative is targeted at converting the maximum possible SHGs into SMEs by providing integrated support in technology, skill development, finance and marketing. All these initiatives helped the bank accelerate the flow of credit to SMEs as well.
What are your targets for SME lending?
We have achieved the overall SME advances target of Rs 3,619 crore as of September 2009 and Rs 3,825 crore as of December 2009. Our SME credit, which constitutes 9 per cent of gross credit, has grown 34.47 per cent year-on-year.
How much investment went into the rural lending initiative?
Our major investment is in establishment expenses on specialised branches, manpower and training expenses. These expenses are incurred on developing the SME sector. The investment is on an ongoing basis and will increase with the inclusion of additional branches as SME branches in the coming period.
What kinds of projects are being undertaken by SME owners there?
Our bank has financed over 1,100 activities, like plying of auto-rickshaws and light commercial vehicles, small restaurants, beauty parlours, photo studios, building material providers, hospitals, solar water heating systems, fabrication and carpentry, among other things.
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What are some of your recent endeavours to assist SMEs?
We organise special programmes for SMEs to create awareness about improved products, improved methods and new markets.
To give a thrust to our lending to SMEs, we have conducted special training programmes for branch managers and credit officers to create a positive outlook on SME financing, and devised simplified loan application forms for micro and small enterprises. Time norms for prompt disposal of loan applications have been announced, with decisions on loan applications to be given within two weeks. We also offer a competitive rate of interest of 9.25 per cent p.a. for new entrepreneurs in their first year of operations.
What is the outlook for the bank for 2010-11?
We expect a business growth of 15 per cent during 2010-11. Deposit growth will be around 14 per cent, whereas credit growth will be around 16 per cent. Advances to SMEs are expected to grow by about 18 per cent.