IOB ties up with industry bodies to boost lending

Chennai-based Indian Overseas Bank (IOB) is planning to collaborate with various stakeholders, including industry associations, rating agencies, traders' organisations and original equipment manufacturers (OEMs) to meet the demand of small and medium enterprises (SMEs) for funds.

IOB's chairman and managing director, M Narendra, said that the bank is, in addition, continuing its efforts to reach out to and fund SMEs through credit camps.

Recently, the bank entered into a memorandum of understanding (MoU) with Bharatiya Yuva Shakti Trust (BYST), a not-for-profit organisation supported by the Confederation of Indian Industry (CII), to help young men and women become entrepreneurs. As per the MoU, IOB will extend finance of up to Rs 50 lakh for eligible manufacturing-sector entrepreneurs and Rs 25 lakh for service-sector entrepreneurs sponsored by BYST.

BYST will provide business mentoring, marketing, training and development support to youngsters, it said. In the past 20 years, BYST has set up eight regional clusters across the country and has financed around 2,900 entrepreneurs, it said.

"Now, with this partnership, there is a focused mechanism to handhold and guide the entrepreneur towards success. There is mentoring to take care of professional and emotional needs which are of paramount importance for a person who is new in business," Narendra said.

He noted that the bank had recently launched products for SMEs in cashew nut processing and for fisherwomen for processing of fish. These are meant for working capital and purchase of equipment. Another scheme has been launched for existing borrowers with good track records.

The bank has tied up with the salon brand Naturals to offer financial support under a credit guarantee scheme for women franchisees engaged in the salon business. Besides, it has entered into agreements with the rating agencies including CARE and CRISIL, to help rate potential borrowers.

Narendra said the SME credit of the bank stands at around Rs 22,000 crore. "In 2012-13 the market was dull in the beginning. However, it picked up during the later part of the year. We expect a 25 per cent growth in SME lending this year."

To boost credit, the bank is focussing on cluster-related projects. In the last two years, growth was good, though there were an increase of 6-8 per cent in non-performing assets, noted Narendra.