Dena chief for new SSI lending risk model

Dena Bank, as part of its new risk management model for small scale industries (SSIs) lending, has proposed to the government to penalise the companies which do not make payments to SSI units in time, as these units are the most risk-prone.

Dena Bank chairman and managing director Anil Khandelwal said on Wednesday PSU banks still had a problem in financing SSI units. So it is necessary to work out a new risk management model for small-scale industries and retail lending.

Talking at the Gujarat Chamber of Commerce and Industry (GCCI) about 'Transformation in the banking sector: Challenges and opportunities', Khandelwal said the entry of private and foreign banks has triggered off the transformation of PSU banks in a big way.

"PSU banks were far from efficient before the mid 1990s," he said.

On lending to SSIs, Khandelwal said SSI units have the ability to get quick solutions to problems that they face. However, since they function in a cyclic manner, any break in the flow, including money for materials supplied to larger corporates, causes severe problems to them.

"SSI lending by banks needs a new look. Banks alone cannot change the situation in favour of SSIs. We have proposed to the government that the corporates which do not pay money due to SSIs in time must face penal action," Khandelwal said.

PSU banks have gone through a huge transformation already and there is still a lot to be done," he said.

"Technology upgradation does not have any meaning unless it does not result in fast, hassle-free service. What is the point if a branch is fully computerised but routine work still takes the same time as before computerisation," he asked.

He said although the concept of core banking solutions is being talked about for two decades, it is just recently that PSU banks have ensured a seamless flow of information across the board.