The Hindu Business Line : SBI Bengal circle raises profit target to Rs 450 cr

State Bank of India, Bengal Circle covering West Bengal, Sikkim and the Andaman & Nicobar Island, has set for itself a profit target of Rs 450 crore for 2006-07, up from Rs 290 crore in 2005-06.

"We have adopted a two-pronged strategy to achieve the target," Mr U S Roy, Chief General Manager of SBI, Bengal Circle, told Business Line here recently, explaining, "we've stopped accepting high cost bulk deposits and we're gradually moving away from traditional lending, particularly in agriculture sector".

The deposit mix was being corrected to reduce the average cost of fund, the present accent being more on retail deposits with the result the bank's retail deposit in the first half of the current fiscal posted nearly six per cent growth as compared less than three per cent in the same period of last year. The high cost bulk deposit posted more than nine per cent growth in the first half of last year, with hardly any growth in the first half of this year. As a result, the total deposit growth of the bank in the Bengal circle in the first half of this year was negligible.

"The diversification into non-traditional advances, particularly in agriculture and small-scale and medium-scale industries, is being spearheaded by a team of marketing and recovery officers, mostly agriculture graduates, who have been specially recruited for this purpose", Mr Roy said, adding, "the result so far has been encouraging".

Slow crop loans

The bank, as it was pointed out, was going slow over crop loans which did not create assets in rural sector. Instead, the thrust was on such activities as animal husbandry, horticulture, non-traditional fisheries (prawn farming in paddy fields with water) which would help create assets in the form of livestocks, construction of cold storage and processing units. The advances were being given also for setting up agriculture marketing complexes.

Value chain financing was another new line of activity. Under this, the bank, in partnership with the manufacturer of a reputed brand of potato chips, is financing the purchase of potatoes by the manufacturer by giving loans to the potato-growers on behalf of the manufacturer and recovering the loan, again with the help of the manufacturer, without any difficulty. "It is a win-win for all, the growers, the manufacturer and the bank and the arrangement has so far worked very well," Mr Roy said. Last year the total advance on this score was a little more than a crore, likely to increase three times as much this year.

The bank was pursuing cluster financing approach, loans to a group of people engaged in the same trade and located in the same place, while advancing loans to small people. The experiments with Zari workers of Bowreah in Howrah district, brass and bell-metal workers in Bankura, surgical instruments manufacturers in Baruipur in South 24 Parganas district and readymade garment manufacturers in Mettiabruz in South 24 Parganas district, proved to be a success. As a result, advances to SSI units jumped by more than 50 per cent in the first half of the current fiscal over the same period of last year and to SMEs by around 23 per cent.

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