ICICI Bank has seen a slight increase in demand for loans from the small and medium enterprise (SME) segment over the last few weeks. “The stimulus package could be a possible reason that SME lending is showing signs of revival. However, we will continue to be cautious in our lending to the segment,” said Sanjeev Mantri, general manager, ICICI Bank, on the sidelines of the nationwide ICICI SME CEOs Knowledge Series programme held in Bangalore on Wednesday. Mantri, however, refused to elaborate on the quantum of growth.

Mantri added that though SMEs are not borrowing too much for capital expansion as most of their growth plans have been halted and the requirement for working capital is growing. “As companies are not receiving payments on time, their need for working capital has gained significance. Credit cycles are becoming extended. With most of their capex plans halted, SMEs are working to improve business efficiency rather than think about expanding,” he added.

ICICI Bank officials say that SME lending to less cyclical sectors. For other sectors that have been badly impacted, the bank is restructuring loans. The bank had late last year said that it may focus on extending the payback period of existing loans than offer more to existing or new borrowers. Banks have come in for some flak from Montek Singh Ahluwalia, deputy chairman, Planning Commission, for their slow lending to the SMEs. Mantri, however, said that lending to the SME sector is challenging as many of them do not provide the necessary documents for loan disbursement.” However, with the second and third generation entrepreneurs coming into the fold in several SMEs, lending to the sector is becoming easier,” Mantri added.

To improve its reach to the SME sector, ICICI Bank is currently running ‘The Knowledge Series’ where its meeting up with SMEs spread over 26 cities across India to advice them on their business functioning. “It is an effort towards promoting an entrepreneurial culture in the country and is a sincere effort to provide a platform wherein problems faced by the SMEs will be analysed, discussed and workable solutions will be offered,” said Mantri.

Pranav Nambiar/ DNA-Daily News & Analysis Source: 3D Syndication