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Excerpts from the speech delivered by Kishori
Udeshi, Chairman, BCSBI at
a meeting organised by the Reserve Bank of India at
Kolkata and Guwahati on September 17 & 18, 2008
The Code of Bank’s Commitment to Micro and Small
Enterprises*
At the outset, let me convey my thanks to the RBI and SBI for
organising this workshop to spread awareness and bring to focus the new Code of
Bank’s Commitment to Micro and Small Enterprises evolved by the BCSBI in
collaboration with the Indian Banks’ Association.
…..............….. the enactment of the MSMED Act in June 2006
has brought a paradigm shift in the treatment to small enterprises by bringing
the service sector under the definition of MSMEs. The following measures to
increase the quantum of credit to SMEs at the right price have also been
announced as a Policy Package –
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Public Sector Banks will fix their own targets
for funding SMEs in order to achieve a minimum 20% year-on-year growth in
credit to SMEs so that credit flow to SMEs doubles in 5 years.
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Public Sector Banks will link the cost of
credit to the credit rating of the enterprise. Credit rating system
developed by
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NSIC SMERA or any other reputable agency to be
considered appropriately for the purpose.
-
SIDBI and Indian Banks’ Association (IBA)
would collect and pool common data on risk in each identified cluster and
develop an IT-enabled application, appraisal and monitoring system for small
(including tiny) enterprises, for example, SIDBI is in the process of
setting up a testing lab for leather products in Kanpur and a common effluent plant
for the SME leather cluster.
-
Public sector banks to utilize the Credit
Appraisal & Rating Tool (CART) as well as a Risk Assessment Model (RAM)
developed by SIDBI.
Banks, from the public sector, private and foreign have of
late started focusing on SMEs, e.g., (i) Corporation Bank has set up dedicated
SME development centres (ii) Bank of Baroda has opened Grameen Paramarsh Kendras
which are specialized counselling centres to provide consistence to farmers,
small entrepreneurs, women and SHGs for availing formal bank services. (iii) SBI
has set up Yuv a Parivartan Centre for Vocational Development for
underprivileged in urban Mumbai. Around 500 are trained annually in
air-conditioning, refrigeration, electrician course, plumbing, beautician,
tailoring and computer education. (iv) Indian Bank has set up 12 Micro sate
Branches (one of which is in Kolkata) which serve as One Stop Shop-visit slums,
liaison with NEOs to for SHGs, cater to training needs and provide financial
conselling and marketing advice. (v) Central Bank of India got the First Award
for lending to MSEs during 2007-08. This bank has entered into an MOU with SME
rating agency of India (SMERA) for rating its SME borrowers. (vi) The Karnataka
Vikas Grameen Bank in Karnataka sponsored by Syndicate Bank has taken the
initiative to help rag-pickers to become successful entrepreneurs. (vii) The
South Malbar Grameen Bank in Kerala sponsored by Canara Bank is actively
involved in forming SHGs, developing entrepreneurship skills and successfully
financing the growth of MSEs. Lest you think that only PSBs are engaged in this,
I may state that both private sector and private banks viz., HDFC, ICICI, Yes
Bank, HSBC are engaged in expanding factoring services to cover SMEs (HSBC),
setting up a Private Equity Fund (with a corpus of $200 million) for SMEs in
certain sectors (ICICI) and entering into agreements with Industry Associations
for reaching out to SMEs for meeting their working capital needs and growth
plans. What is, therefore, the need of the hour is to encourage Grameen Banks to
increase these efforts manifold and bring about a groundswell of change in the
mindset of their sponsor banks and other scheduled commercial banks in dealing
with MSEs.
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