The Hindu Business Line : `SMEs must adopt corporate culture to bring down costs'

There is tremendous scope to bring down administrative costs if SMEs learn to adapt to the core banking solution (CBS) implemented in the banking sector, according to Mr Bhaskar Niyogi, Deputy General Manager, SME (LHO), Chennai, SBI.

Interacting with members of the Madurai District Tiny and Small Scale Industries Association on Wednesday, he said that they should move from proprietorship/partnership culture to corporate culture and look for higher value addition by moving up the chain of products to benefit from the growing global market opportunities.

On its part, SBI has come up with a variety of flexible schemes to suit their needs and brought about many in-house procedural changes in which `relationship managers' have come to occupy an important role in providing personalised services.

The bank's market share in SSI lending as on September 2005 stood at 20 per cent, he added.

SMEs constitute 23 per cent of the total financial sector advances to the commercial segment and 45 per cent of bank advances in the country and they would continue to receive attention with the mandatory priority sector lending stipulated for the banks, he said.

Their limited managerial resources, insufficient financial information, susceptibility to environment, higher NPA levels, and high collateral pose challenges in lending to them.

According to him, increased use of the Internet and online banking will help in bringing down the costs of operation.

To help the SMEs, SBI has adopted continuous in-house training for upgradation of skills of bank personnel to understand the problems, establish separate marketing and sales teams to reach out to potential customers, speed up sanction of loan through centralised processing cells, and develop relationship managers to provide personalised services.

Special branches dedicated to SSIs have been opened in all major industrial estates.

Manufacturing centres for potential business have been identified in the Chennai circle, he added.

On advances to the SSI and tiny sector in Madurai module, he said that they stood at Rs 428.59 crore and Rs 168.73 crore respectively, as on December 2005.