Date:27/01/2006 URL: http://www.thehindubusinessline.com/2006/01/27/stories/2006012701161700.htm

Back APSFC, Bank of India in pact for speedy credit to SMEs

Our Bureau

Hyderabad , Jan. 26

IN an attempt at ensuring integrated and speedy flow of credit to SMEs, the Andhra Pradesh State Financial Corporation (APSFC) has entered into an alliance with Bank of India.

The alliance is meant to provide easy facility of working capital for all the assisted units, the APSFC Managing Director, Mr Ajeya Kallam, told newspersons on Wednesday.

The corporation had earlier entered into similar agreements with Andhra Bank and State Bank of Hyderabad (SBH).

According to Mr Kallam, the corporation sanctions term loans to industrial units for both existing and new projects.

Since APSFC is a term loan lending institution, entrepreneurs are required to approach commercial banks for their working capital requirements.

Owing to the time lag between the sanction of term loan of APSFC and sanction of working capital term loan by commercial banks, the SME units face difficulty in securing timely and adequate working capital funds from commercial banks.

The alliances being forged by the corporation with commercial banks would ensure an integrated package of financial requirements of industrial concerns such as term loans and working capital, both fund-based and non-fund-based limits, under the one-stop shop concept, Mr Kallam said.

While APSFC can sanction term loans of up to Rs 5 crore, the alliance with banks enables it to participate in larger loan sanctions in projects with requirement of more than Rs 5 crore of term loan.

While APSFC can share the term loan with banks, the customer would have the advantage of obtaining working capital requirements from the banks, Mr Kallam said.

Stating that the corporation has already crossed credit sanctions of Rs 450 crore for the current fiscal against the target of Rs 500 crore, the APSFC Chairman, Mr M. Gopalakrishna, said that the corporation was set to exceed the targets.

Further, stating that the corporation has evolved a strategy of substantially stepping up credit to SMEs, he said that APSFC would work out fresh credit targets keeping in view the alliances with commercial banks.