SME City

Federal Bank Upgrades SME Business Banking

By SiliconIndia     
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Bangalore: Federal Bank is evolving a more focused approach towards the SME sector after considering the emerging business trends.One of the main fortes of the bank lies in the SME sector, and other main customers are NRIs.

In an interview with MoneyControl.com, Shyam Srinivasan, the managing director and CEO of the Kerala-based bank said that Federal Bank’s lending tends to be more in the SME sector in India since the bank itself is built on the SME model. When asked about the risk that loans to SMEs posed to banks especially as a result of bad loans, Srinivasan said “SME focus does not mean just lending. We can add more products while building healthy relations with our SME clients.”

The bank, which always acknowledged contribution of SME’s into the national economy in terms of production, export and employment is now offering various current account products and parameterized loans for each sector under SME. 

The main features of Federal Bank SME products:

*Competitive pricing

*Relaxation in collateral security

*Collateral free loans with Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) cover

*Customization in various current account products

*Cash management services

*Internet bill payment facility

With the introduction of these features, Federal Bank is planning on the development of a new vibrant and responsive SME sector.

Federal Bank and the Small Industries Development Bank of India (Sidbi) signed a MoU in 2007, aiming to increase the credit flow to the SME sector to from Rs 5,000 to Rs 10,000 crore by 2010.

The bank’s chief general manager, TS Jagadeesan said in October last year that even when most banks didn’t have much of a growth scale, Federal Bank found numerous lending opportunities in the SME and agricultural sectors. He further added that the bank’s SME lending was expected to reach 40 percent, up from 28 percent in 2011.

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