IDBI ties up with WRI for consultancy services on energy
06 Oct 2010
IDBI Bank under a tie-up with US-based environment research organisation World Resources Institute (WRI) will provide consultancy services to its borrowers on energy cost reduction. IDBI Bank would fund the implementation costs of the energy-saving initiatives while WRI would guarantee the savings.
In the event of a company's energy bills not lowering during the stipulated period and if the company does not repay the loan, IDBI can invoke the WRI guarantee as per the agreement.
According to TR Bajalia, executive director and head of MSM at IDBI Bank, energy costs accounted for as much as 25 per cent of the production cost for companies. Besides cost reduction, the move aims at protection of the ecosystem. The tie-up was for micro, small and medium enterprises (MSME) segment and IDBI expected forging units, textile, steel sector and the hotel industry to benefit from the tie-up.
He said WRI would identify areas for energy saving for companies. By reducing the energy cost, companies would be able to repay the loan and improve profitability, he added.
According to a statement issued by IDBI, WRI has more than 400 partners in 50 countries. It is in a similar agreement with Axis Bank, IDBI Bank officials said. IDBI has an exposure of Rs21,000 crore to MSME, and of this, Rs10,000 crore was for SME segment. It has gross non-performing assets in MSME at 2.4 per cent of the portfolio.
Also, IDBI Bank has introduced an online application process on its website for the MSME sector. The site also features a web-based application for MSME borrowers, which would help them track the status of their applications submitted to the bank online. The system is intended to bring about transparency in the processing of loan applications and enable a borrower to track the status his loan application under process.
Meanwhile, the bank, which is the seventh largest public sector bank, has decided to stop major corporate lending in the financial year and instead focus on increasing its low deposit base through current accounts and savings accounts (CASA).
The bank aims to meet its priority sector lending targets through enhanced advances to micro, small and medium scale enterprises and growing its home loan book. Last year, it fell short of meeting the priority sector target by Rs6,000 crore, which, now, would have to be remitted to Nabard in tranches.