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Indian Overseas Bank (IOB) is planning to open 40 Small and Medium Enterprises (SMEs) cluster branches during this year.
“The micro, mini and small enterprise (MSME) sector is one of the focus areas for us. We have applied for licence from the Reserve Bank of India to open SME cluster branches across the country,'' Mr M. Narendra, Chairman and Managing Director, IOB, told Business Line here on Thursday.
Efforts were also on to launch a new scheme ‘SME Instant Cash' to meet emergency working capital requirements of SMEs.
CORPORATE CREDIT
IOB is also focussing on tapping the business potential in the mid-corporate segment. “There is huge credit appetite among the mid-corporates particularly in tier II and tier III locations,'' the Chairman and Managing Director said.
IOB had already sanctioned Rs 27,000 crore of corporate credit as on date including some loans sanctioned last year but were not disbursed yet.
“Though there are some concerns on asset quality in some sectors in the banking industry, as a whole, the credit growth potential still looks positive,” Mr Narendra said.
The Chennai-based bank, which posted a credit growth of over 40 per cent last year, is now expecting to clock 25 per cent credit growth this year as against 18 per cent projection given by the RBI.
IOB would be raising Rs 3,500 crore tier I capital and had sought Government permission to do so as it would be required to maintain a 25 per cent growth.
RATE HIKE Impact
While conceding that the recent hike of interest rates by many a bank in the aftermath of rate hike by the RBI could be ‘painful' to customers to some extent, Mr Narendra said his bank would adopt a ‘differentiated approach' to lessen the impact.
“For instance, our interest rates in retail and SME and educational loans are still attractive despite hike in base and prime lending rates recently,'' he said.
The cost of funds, however, could go up. “But, we are expecting that our net interest margin could be maintained 2.85 per cent as was the case in the first quarter ended June 30, 2011,'' he added.
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