The Hindu Business Line : Indian Bank bullish on urban micro credit

Hyderabad, Oct. 2 Indian Bank is bullish on micro credit in urban areas. It plans to add seven more exclusive micro-finance branches (Microsate) by the end of the current financial year.

The bank currently has five Microsate branches (a satellite branch for micro loans) for extending credit to self-help groups (SHGs) in urban areas, its Chairman and Managing Director, Mr M.S. Sundara Rajan, said.

Talking to newspersons after the opening of a Microsate branch here on Tuesday, Mr Rajan said the new branches would be opened at Ahmedabad, Delhi, Guwahati, Bhubaneswar, Mumbai and Pune and a second branch in Chennai.

The existing branches are in Chennai, Kolkata, Patna, Vijayawada and Hyderabad.

So far, the bank has extended Rs 640 crore advances to SHGs in urban areas across the country.

“By the end of the current year, we expect each of the 13 Microsate branches to disburse Rs 25 crore. This will take the total outstanding micro-credit in urban areas to over Rs 1,000 crore,” he said.

“ We are advancing micro credit at 11.5 per cent whereas the interest charged by the moneylenders would be exorbitant. In addition, SHG members will also get a credit card which allows them to draw up to Rs 25,000,” he said.

Our branches in rural areas are also actively involved in extending micro- finance. However, we want to tap the urban potential,” Mr Rajan explained.

The Hyderabad branch had distributed Rs 7.5 crore to 750 SHG groups on the inaugural day itself.

“This demonstrates our keenness,” he pointed out.

The recovery rate in micro-credit was 99.5 per cent, he added.

On the bank’s business in general, the chairman said the fundamentals were very strong.

“We have a net NPA of 0.32 per cent while the gross NPA is at 1.85 per cent.

The credit-deposit ratio is 59 per cent.

As on September 31, 2007, our total business stood at Rs 83,000 crore.

By end of March 2008, it could be well over Rs 93,000 crore,” he said.

On the Basel II norms, Mr Rajan said the bank would be “Basel II ready” by this month-end.

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