Andhra Bank inks pact with Sidbi

To co-finance projects related to SME, service sector & infrastructure

Andhra Bank has signed a memorandum of understanding with the Small Industries Development Bank of India (Sidbi) to co-finance projects related to the SME sector, service sector and infrastructure.

The joint financing will be taken up at SME industrial centres at Hyderabad, Chittoor, Vijayawada and other clusters in Andhra Pradesh in the first phase. It would be extended to other centres based on the response at these centres.

Addressing the media, K Ramakrishnan, chairman and managing director of Andhra Bank, said, "We will be co-financing the projects with Sidbi at an interest rate of 10 per cent and for women entrepreneurs, it will be at a concession of 0.5 per cent."

While Andhra Bank and small enterprises financial centres of Sidbi will co-finance or exclusively finance the term loan component, the working capital will be taken up by Andhra Bank.

"We will jointly explore the possibilities of synergies in micro credit and cluster development and Sidbi and Andhra Bank will be the preferred partners for new initiatives," he added.

Andhra Bank is also looking at converting 13 specialised SSI branches to specialised SME branches and is approaching the Reserve Bank of India (RBI) for necessary approvals. It has also identified three branches for focused lending to SMEs in fan, pharma, auto and hosiery clusters.

Andhra Bank's advances under the SME sector at the end of June 2005 were Rs 1,863 crore and it has targeted to touch the Rs 2,520-crore mark by March 2006.

The bank has identified 14 clusters, apart from the fan cluster and pharma and drugs cluster identified by RBI for development, to take up focused lending.

Its exposure to these units has been Rs 45 crore. Incidentally, Andhra Bank is also the only Asian bank to have been named among the top 1,000 world banks by 'The Banker' in its July 2005 issue on the basis of return of capital.

N Balasubramanian, chairman and managing director of Sidbi, said, "We are keen to partner with various commercial banks for different financial arrangements."