Union Bank of India on Saturday said it would come up with lending products specifically for start-ups.
“Currently there are no products to address their (start-ups’) long gestation period… Start-ups do no generally create cash flow immediately and, hence, specific products need to be designed for them,” Union Bank of India Managing Director & Chief Executive Officer Rajkiran Rai G said on Saturday.
The public sector bank organised a consultative meeting of all branch heads at the regional level to align banking services with national priorities.
The finance ministry had asked the state-run banks to initiate a month-long consultation process with officers starting from branch levels to seek suggestions for achieving a $5-trillion economy in five years.
“Banks are doing their job but there is a perception gap in terms of the needs of the people. We are holding meetings with branch managers at regional level and hearing them out with regards to the current products, changes required and any new ideas or support that they need,” said Rai.
The ways to improve success of products such as those in Mudra were among the suggestions received from branch managers, he said.
“For instance, the Government e-Marketplace (GEM) portal is meant for online procurement of products and services by the government. We have received suggestions on whether Mudra loan applicants can go on GEM portal and buy so that end use of the product is assured. This is because borrowers in Mudra are usually first-time borrowers applying for greenfield projects. Mudra is happening but our branch managers are seeking more comfort,” said Rai.
Commenting on the credit growth, Rai said credit demand from the “right kind of people” was less currently.
“However, we are seeing a 15 per cent growth in retail and 6-9 per cent growth in MSME (micro, small and medium enterprises). We are focusing on newer projects such as in roadways and oil & gas including city gas distribution. We are foreseeing a good credit growth on the back of the infrastructure spending announced by the government.”
After regional level meetings, the public sector banks will meet at national level along with results from their respective consultation meetings.
Meanwhile, on August 23, Union Bank of India is launching two repo rate-linked lending products in vehicle loans and housing loans. The products have been designed to affect same-day transmission whenever repo rates change.
Rai said, “There will be an impact on the NIM but then parallelly we need to introduce a product on the liability side so that our cost of deposits goes down proportionately.” Going forward, the bank plans to link every loan category to the external benchmark, Rai added.