Special Correspondent

To grant open term loans up to Rs. 5 cr.

CHENNAI: Oriental Bank of Commerce (OBC) launched here on Friday a "mid corporate branch'' which will serve customers (including non-corporates) seeking "open term loans'' from the bank.

The branch, located on Kilpauk Garden Road, will be exclusively devoted to sanction of open term loans (which entail a standby credit apart from sanctioned loan limits) for a minimum of Rs. 10 lakh to a maximum of Rs. 5 crore to existing and potential customers in manufacturing and services sectors. Construction contractors can avail themselves of 80 to 85 per cent of the capital cost of equipment to be purchased as term loan, besides working capital limits.

Corporates with a net worth of at least Rs 25 crore and uninterrupted profits for the last three years can get loans of a tenure of up to 35 months for substitution of high-cost debt, augmenting long term resources and for general purposes including margin money for acquisition of long term assets.

K. N. Prithviraj, Chairman and Managing Director of the bank, who inaugurated the Mid Corp Branch, told presspersons that the next such branch would be opened in Coimbatore. OBC, which has not any sponsored regional rural bank (RRB), proposed to open four training centres for farmers near Jaipur, Firozepur and Dehra Dun. It would also focus on opening branches in unbanked areas of Bihar which would provide a source of low-cost funds.

Mr. Prithviraj (who is scheduled to demit office shortly) said that since the merger of Global Trust Bank with OBC in August 2004, the bank's performance had further improved, with net NPAs coming down to 0.4 per cent, and capital adequacy going up to more than 13 per cent and return on assets to 1.4 per cent. The bank made up its shortfall in agricultural lending by making interest-bearing deposits of Rs. 286 crore with the RIDF of NABARD.

The CMD said the three-bank alliance that OBC had entered into with Indian Bank and Corporation Bank in September last year had now chalked out plans to share appraisal processes, expertise and training facilities, besides extending consortium loans. "This will help us to finance larger borrowers and compete with bigger banks in the absence of consolidation among smaller banks,'' he said.