More than a century old Bank of India is one of the leading commercial banks in the country with pan India presence. It is one of the public sector banks with considerable overseas presence having footprint in 22 foreign countries across five continents with 60 offices, including five subsidiaries, five representative offices and one joint venture (JV), at key banking and financial centres like Tokyo, Singapore, Hong Kong, London, Paris and New York.
Micro, Small and Medium Enterprises (MSMEs) is a very important segment in the economy of the country that contributes substantially to the country’s manufacturing GDP. It contributes 45 % of the manufacturing output and nearly 40 % of India’s exports.
Reserve Bank of India (RBI) last year revised the guidelines for targets and classification of priority sector lending. Accordingly, the cap on applicable loan limits under services, viz Rs 5 crore per borrower to Micro and Small enterprises and Rs 10 crore to Medium enterprises, has been removed for classification under the priority sector. As a result, all bank loans to MSMEs which are engaged in providing and rendering of services as defined in terms of investment and equipment under MSMED Act 2006, shall qualify under priority sector without any credit cap. Focus on programmes, such as, Make in India, Skill India and Digital India have also brought major changes in the MSME credit.
During the financial year 2018-19 BOI added 194,970 new accounts and sanctioned Rs11,589.54 crore and disbursed Rs 11,183.34 crore. Under MUDRA total sanction was Rs 6430.76 crore, achieving 98.17 per cent of allocated budget funding as many as 3,65,272 accounts.
The financial year 2018-19, saw BOI adding 583 MSME accounts with a total sanction of Rs 131.06 crore. Under Stand Up India the cumulative number stood at 5945 accounts with aggregate sanction of Rs 1115.97 crore. With CGTMSE credit guarantee cover BOI disbursed collateral free credit to 25,244 new accounts involving an aggregate amount of Rs 3180.91 crore. In fact, as at the end of the financial year 2018-19, BOI has supported 366,103 borrowers with a credit of Rs 24865.93 crore. BOI has launched GST based financing to MSME borrowers moving away from the conventional method to cash flow based assessment.
To overcome the financial mismatch due to levy of input credit, BOI launched a unique GST input credit funding scheme. The bank also on boarded the TReDS platform (RXIL) to facilitate Invoice discounting facility for MSME borrowers. The bank is on boarding the Contactless Platform (Capita World) acquired by SIDBI led consortium of public sector banks for improved due diligence and automation of information aggregation and underwriting. Over 9000 accounts were accorded in principle sanction on the portal.
The bank is introducing CIBIL MSME Rank (CMR) and ZED (Zero Defect Zero Effect) Rank to aid branches for proper and prudent business sourcing. CMR usually ranks MSME based on their credit history on a scale of 1 to 10.
During the financial year 2018-19 BOI added 194,970 new accounts, sanctioned Rs11,589.54 crore and disbursed Rs 11,183.34 crore. The bank is making arrangements with various FinTechs, CIBs and OEMs for ease of finance to MSMEs. The digitalizing process of credit underwriting also will lead to improvement in TAT and delivery efficiency.
With MSME hubs under zonal offices BOI has specialized MSME Credit cells in all key centres having potential for MSME business. These cells process all proposals where limits are beyond Branch Managers’ power. Branches forward the proposals to the cells with necessary papers after varying the credentials of the applicant.
The bank gives special attention of reducing the turnaround time in completing the process and disbursement. The bank has also established SME City Centres to provide assistance to national banking branches for acquiring new customers and maintain closer relationship with SMEs. At present, there are 21 SME City Centres. Now the bank is opening of new SMECCs (Processing Cells) at various locations and increasing the number of SME focused branches from 100 to 207 for facilitating the SME financing.
The bank has increased its focus on area based lending schemes and recently approved various new cluster schemes. It re-launched the Channel Finance Scheme with aggressive pricing and relaxed norms through a digital platform for financing to forward and backward linkage of large corporate and industrial houses. The bank is entering into partnerships with various FinTechs and Credit Information Bureaus, original equipment manufacturers (OEMs) for ease of finance to MSMEs.
Along with this, the digitalizing process of credit underwriting will lead to improvement in turnaround time (TAT) and delivery efficiency. User Acceptance Testing (UAT) of the same is in final stages. The bank has introduced exclusive Learning Management System (LMS) for MSME borrowers through the Credit Proposal Tracking System (CPTS) module for online application and real time tracking of MSME proposals.
For eligible MSMEs, there are many offers as the bank has launched Welcome Offer with various concessions and freebies for new borrowers.
The bank is also actively participating the Udyami Mitra portal, a marketplace for new MSME loans. In line with the government policy the bank offers finance to Star Start Ups, as identified by government and government approved incubation centers. On the other side, to further boost growth of MUDRA scheme, the BOI has launched various MUDRA centric schemes like Star Weaver MUDRA scheme, Star e Rickshaw scheme, etc.