ICICI plans PE for SMEs

Kolkata, Aug 18: ICICI Bank on Monday said it is planning a dedicated SME private equity fund of about $200 million in the next few months.

This would be the first private equity fund by the bank. Currently, all private equity funds are being managed by ICICI Ventures.

"We want to increase credit in the SME sector and for this a dedicated equity fund had been proposed which would be in place in the next six to eight months," ICICI Bank general manager (business banking), Mr Sanjiv Sherawat, said on the sidelines of the CII organised seminar on alternate financing of SMEs.

"The structure of the fund is yet to be finalised, but though we will remain the prominent partner, we will have other investors also," he said.

Meanwhile, ICICI Bank said it is working towards cutting its rising bad debts ratio as its growth slows due to high interest rates and double-digit inflation, its joint managing director said.

The bank, which is also listed in New York, has stopped several products such as small personal loans and is increasing vigilance on credit cards dues, said Ms Chanda Kochhar, the deputy managing director of ICICI Bank.

"Recognising the fact the rate of our balance-sheet growth is slower, we have to work towards reducing the quantum or ratio of non-performing assets (NPA). That is the next step," she said.

ICICI’s net NPAs rose to 1.8 per cent of total advan-ces in the June quarter from 1.35 per cent a year earlier. The value of bad debts rose 51 per cent to Rs 4,030 crore from Rs 2,670 crore.

ICICI Bank, which was one of the most aggressive retail lenders in the Indian market, had a net non-performing assets of 0.71 per cent of total advances as at March 2006.

Yes Bank group president, Mr Varun Tuli, said the bank was also in the process of setting up a private equity fund. "We have not yet decided whether we will make it a sectoral fund or general fund.

By September, we hope to decide on the structure. The fund will not be less than $100 million," Mr Tuli said.

Meanwhile, Securities and Exchange Board of India executive director, Mr M.S. Ray, said he expects the separate SME exchange or platform would be in place by this fiscal.

"We are analy-sing the feedbacks received. We are serious about the alternate platform for SMEs and do not want a repeat of the previous attempts," he said.

— PTI, Reuters