The Hindu Business Line : Andhra Bank, SBH join hands with APSFC to finance small units

ANDHRA Bank and State Bank of Hyderabad (SBH) have entered into an agreement with Andhra Pradesh State Financial Corporation (APSFC) to co-finance small and medium enterprises, service sector and infrastructure projects.

While the APSFC would take care of the term loan component, the two commercial banks would attend to working capital requirements. The choice of selecting the bank would be left to the customer.

Senior officials of the three institutions signed a memorandum of understanding here on Thursday.

Addressing a press conference later, Mr K. Ramakrishnan, Chairman and Managing Director of Andhra Bank, said APSFC and the bank would share the skill sets, risks and speed up delivery of service to customers.

For the projects involving term loans up to Rs 5 crore, the APSFC would finance the entire amount and the bank would fund the entire working capital. In bigger projects that went beyond Rs 5 crore, the term loan could be shared as mutually agreed on case-by-case basis, with the share of APSFC not exceeding Rs 20 crore.

All decisions regarding dealing with the borrower would be taken by the APSFC and the bank for their respective loan components.

The bank, which had set a target of Rs 2,518 crore for SME advances for the financial year, had disbursed Rs 2,250 crore up to November.

The bank, which had 13 specialised branches to focus on small-scale sector, would have three branches soon. "We have got the Reserve Bank approval to convert the Autonagar branch (Vijayawada Zone), Balanagar branch (Hyderabad) and Anuparapalayam branch (Chennai) into specialised branches to focus on fan, pharma and auto and hosiery clusters," he said.

Besides, the bank had identified 16 clusters in Andhra Pradesh for taking up focussed lending. The bank already supported two such clusters in Hyderabad.

Mr Amitabha Guha, Managing Director of SBH, said the officials of three entities would discuss and finalise the modalities of the agreement. Mr M. Gopalakrishna, Chairman of APSFC, said the association would help the corporation to take part in bigger projects.

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