ICICI Bank betting big on SME business
Wednesday, December 20, 2006
“The future of the SME business is very promising and ICICI Bank is ideally positioned to exploit the opportunity,” Vijay Chandok, Senior General Manager (Small Enterprises Group), ICICI Bank, said here today.
Many SMEs are in the investment mode to create capacities, quality processes and upgradation and modernisation of their facilities, he said, adding this constituted a huge opportunity in the segment for the country’s second largest commercial bank.
“The demand is robust and our SME business should grow at around 30-40 per cent over the next three years.” “We define SMEs as companies having a networth of up to Rs 50 crore,” he said. Typically, the bank’s smallest customer comprises one-man businesses like consultants. Private sector financial giant ICICI Bank is betting big on its small and medium enterprise (SME) business which it estimates will grow at around 30 to 40 per cent over the next three years.
“The future of the SME business is very promising and ICICI Bank is ideally positioned to exploit the opportunity,” Vijay Chandok, Senior General Manager (Small Enterprises Group), ICICI Bank, said here today.
Many SMEs are in the investment mode to create capacities, quality processes and upgradation and modernisation of their facilities, he said, adding this constituted a huge opportunity in the segment for the country’s second largest commercial bank.
“The demand is robust and our SME business should grow at around 30-40 per cent over the next three years.” “We define SMEs as companies having a networth of up to Rs 50 crore,” he said. Typically, the bank’s smallest customer comprises one-man businesses like consultants.
Presently, the bank has a SME customer base of nearly 8 lakh and the business contributes 12 per cent of the bank’s total fee business.
Pointing out that the bank has achieved a rapid growth in its SME business in the last 2-3 years, he said this was mainly due to a “focussed approach” towards this sector.
“We now have a separate division focussed on this business,” he said.
The bank’s total SME business is presently around Rs 15,000 to Rs 16,000 crore, he said.
According to him, with the Government laying tremendous emphasis on development of the SME sector, the year-on-year (YoY) credit flow to this segment should witness a significant rise. In this context, he highlighted the setting up of a separate Department of SMEs by the Government to bring not only focus on its development but also to consolidate the fragmented efforts of many entities in this direction under one umbrella.
The Finance Ministry has also issued a directive relevant entities to double credit to this sector over the next five years, which indicates that the underlying fabric of this segment is compelling, he said.
