State Bank of Hyderabad to up SME advances

State Bank of Hyderabad (SBH) is targeting to increase advances to the small and medium enterprises (SME) space by almost Rs 1,600 crore in the current fiscal.

“Our current exposure to the SME sector stands at Rs 6,490 crore and we are looking at a growth of 20-25 per cent in this segment,” Bank MD Renu Challu told Business Standard.

Last year, the segment grew by 22 per cent, she said, adding that collateral was not required for loans up to Rs 1 crore according to Reserve Bank of India (RBI) guidelines.

Total advances of the bank hover around Rs 43,000 crore, which continue to grow at 20 per cent.

Besides, the bank will open 171 new branches in this financial year to add to its tally of 1,034 pan-India.

“We also have 18 commercial branches, especially in the metro cities, where credit demand is high. However, our priority remains retail lending,” she added.

“Our capital adequacy ratio is 14 per cent, which means we have enough funds to grow without borrowing from external sources,” she said.

SBH, which is the largest associate bank of State Bank of India (SBI), has sparse presence in Uttar Pradesh, with five branches.

Majority of the branches are located in its parent state of Andhra Pradesh, Karnataka and Maharashtra.

“We have restructured and rescheduled Rs 4,000-crore loans to the SME sector till June 2009 to enable them cope with the economic downturn,” she said.

She said net Non Performing Assets (NPA) and gross NPA of the bank stood at 0.4 and 1.20 per cent respectively, which were among the lowest in the Indian banking industry.

“We are also aiming to increase our Current and Savings Account (CASA) level to 30 per cent this fiscal, up from 28 per cent. We will soon launch a new salary account product to boost CASA,” she noted.

She acknowledged the fact that credit off take in economy was still sluggish and investments remained in the sub-optimum levels across sectors, except for power and steel.

“There is enough liquidity in the market to provide for future growth momentum in the country,” she added.

Meanwhile, SBH have recruited 1,600 clerks and plans to hire more staff to keep pace with expansion.

Challu was in town to inaugurate SBH’s new office and its first ATM in Lucknow.