IDBI to hawk agri credit via UWB

Industrial Development Bank of India will operate the branch network of the erstwhile United Western Bank as a strategic business unit for agriculture, SME, traders and socially weaker sections.

UWB has strong presence in semi-urban and rural areas with substantial farm and SME credit portfolio. Besides covering farm and SME segments, the new SBU will also work on government-sponsored schemes, IDBI chairman V P Shetty said.

IDBI had received about five years regulatory forbearance to meet the priority-sector lending targets when it had converted into a commercial bank form development finance institution. The merger of UWB will help grow the priority-sector lending portfolio of IDBI.

UWB has a strong branch network in tier-II cities and rural area. This will be useful for growing business in agriculture, SME and trading.

The last two segments can fetch better margins, IDBI executive director B Ravindranath said. At present, IDBI's outstanding SME portfolio is about Rs 8,000 crore (Rs 80 billion).

The Mumbai-based bank posted a year-on-year 17.2 per cent growth in its credit portfolio at Rs 54,500 crore (Rs 545 billion) at the end of September. Most of the growth has come from retail segment. Its deposits rose by 69.5 per cent to Rs 31,000 crore (Rs 310 billion) at the end of the first half of 2006-07.

Meanwhile, IDBI applied to Reserve Bank of India for 150 branch licences to have a pan-India presence. This is in addition to 230 branches that fell in its lap following the UWB merger.

"The bank has minimal presence in some states, like Orissa and Himachal Pradesh, which are becoming economically active. We will like to grow our presence in tier-II cities in such states, Deputy Managing Director O V Bundellu said.

Prior to UWB's acquisition, IDBI had planned to open 500 branches by the end of March 2008 with an asset base of Rs 1,10,000 crore (Rs 1100 billion) and overseas presence.

It has already approached the regulator to get green signal to establish presence in places like Singapore and Dubai.