The Art Of Smart Lending: ‘CUB’ In TN Beats Mumbai’s Big Cats At The Stock Exchange; Its Shares Grow 27 Per Cent 


The share price of City Union Bank (CUB), a relatively small bank based in Tamil Nadu, increased by 27 per cent over the last 12 months, the best such performance among Indian lenders except for Axis Bank, reports Business Standard (BS).

In the Bombay Stock Exchange’s Bankex Index, CUB’s stock performance, which was better than that of the country’s top two lenders, HDFC Bank and SBI, was primarily driven by the bank’s focus on Small and Medium Enterprises (SME) lending.

“They are the gold standard in SME lending. They have very good insight into how small industries work in their region,” Yuvraj Choudhary, an analyst at Anand Rathi Financial Services told BS.


“Unlike larger lenders, City Union does more relationship-based lending, catering to the needs of the SME borrower, which can be quite volatile. That’s why they can charge a premium in this relatively untapped segment,” added Pankaj Agarwal, an analyst at Ambit Capital.

While CUB has managed to maintain its bad loan ratio at 2.9 per cent for the December quarter (Q3 FY19), well below its regional and national level peers, it has continued to lend to small business engaged in Tamil Nadu’s textile industry. It also extends a line of credit to small traders, selling a wide range of products, from toothpaste to tyres.

Fastrack 59-Minute Loans

Earlier, it was reported that the Union Finance Ministry directed public sector banks to fastrack the issue of 59-minute loans to small businesses and decrease the time taken between preliminary approval and final loan sanction.

The PM Modi-led government launched the new scheme that allowed medium, small and micro enterprises (MSMEs) to avail loans of up to Rs 100,00,000 from PSBs in under 59 minutes. In just two months after the launch, over 1.12 lakh MSME loan applications of Rs 37,412 crore were approved by the banks.

Also Read: A Lesser Known Impact: Credit Flow To Micro, Small Enterprises Saw Fivefold Increase After GST, Claims Report

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