Kochi-based Federal Bank will add 100 branches this fiscal even as it increases its focus on lending to small businesses.

Most of the branch expansion will be in the state of Tamil Nadu where Federal Bank already has 200 branches. Karnataka, Andhra Pradesh and Telangana will also have a fair share as these are the states which have the largest concentration of small businesses.

The largest private sector lender in Kerala has one-third of its total loan book of Rs 1,86,593 crore (as of June 2023) towards SME loans and so are the retail and wholesale books, said Federal Bank executive director Malini Warrier on the sidelines of the three-day global SME financing summit organised by Sidbi.

The private lender had opened 75 branches last fiscal. The bank will continue to open more SME-focused branches this fiscal as well.

“The idea of focusing on SMEs is that we should be growing in sectors of the economy which is growing faster or which has more credit needs. And the fast growing industry segment in terms of credit is SMEs,” said Warrier.

During the past five years, the bank has almost doubled its branch presence to 1,100 from 600, Warrier pointed out.

As part of the SME focus, the bank will be driving the co-lending model too.

Federal Bank has already tied up with a fintech player Yubi and is in discussions with half a dozen more. The lender is likely to close co-lending agreements with at least four of them during the fiscal.