SIDBI, Federal Bank sign MoU to hike SME credit

By Staff
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Kochi, Jan 17 (UNI) The Small Industries Development Bank of India (SIDBI) and Federal Bank Ltd today entered into an MoU to increase the flow of credit to Small and Medium Enterprises (SME) sector units in select industrial clusters in Kerala.

Speaking to mediapersons here, SIDBI Executive Director V Chandrasekaran said the alliance would leverage the strength of SIDBI in term lending with the reach of Ferderal Bank in working capital lending to deliver better value to customers of both the banks.

He said the tie-up would work to achieve the objectives of the 'Small Enterprises Financial Centres' (SFEC) scheme announced by the RBI. "Apart from credit to SMEs, the alliance would also focus on joint initiatives in the areas of micro-credit, cluster development and other development initiatives," he added.

Mr Chandrasekaran said for ensuring faster credit dispensation, SIDBI was using Credit Appraisal and Rating Tool (CART) since 2003 for credit appraisal and rating of credit applications for term loans up to Rs 50 lakh from existing enterprises.

Chairman and CEO of Federal Bank M Venugopalan said the bank had identified six industrial clusters - rice milling, plastic industries, wooden furniture, coir industry, sea food industry and cashew processing for joint financing with SIDBI. The bank was aiming to double the credit flow to SMEs from the present Rs 5,000 crore to Rs 10,000 crore in three years, he added.

Mr Venugopalan said under this arrangement, the two banks would jointly work to identify projects and take up co-financing or exclusive financing of term loans by SIDBI and Federal Bank would lend working capital.

Realising the importance of SME growth, the Federal Bank had formed a new department, 'SME and Agricultural Credit Department' to provide products for these segments, he noted.

UNI

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