News: Citigroup India to lend more to small businesses

(RTR 27/09/2006) Mumbai - Citigroup India, the Indian unit of Citibank N.A. sees a growth opportunity in lending to small businesses in the country, a senior official said on Wednesday.

"It is a significant focus area for us and a major growth segment not only in India but other countries also," Director & Business Manager, Commercial Banking Group, Sandeep Ghosh said on the sidelines of a seminar on global banking.

The lending rates for this segment are 1.5-2 per centage points higher than for a tripe-A rated large company. "The lending rates are competitive for a SME (small and medium enterprise) with a good track record," Ghosh said.

About 10-15 per cent of the multinational bank's corporate lending portfolio is for the small and medium businesses, he said. Citibank started lending to small enterprises in India in 1998.

"The spreads are not significantly higher in this segment, but we get higher yields over a period of time, we get stickier customers and regular annual revenues," he said.

"In order to have a sustainable revenue model for this segment, we have to grow the business at 30-40 per cent," Ghosh said, adding it was not always possible to get this kind of growth every year.

The bank plans to double the number of its 300 employees dedicated to the SME segment in the near future, Ghosh said.