Country's largest private lender, ICICI Bank is planning to slow down its lending to small and medium enterprises (SME) sector. The decision comes due to apprehensions in funds from the sector. The bank will reduced its SME lending for the rest part of the ongoing fiscal.

Vijay Chandok, Senior General Manager and Global Head, SME at ICICI Bank said, "There is stress in the SME portfolio. The flow of money from large companies to small ones is becoming slower. We are seeing lengthening of receivables. Credit cycles are becoming extended. If we see lengthening further, then we will have to restructure... infuse liquidity and restructure the debt."

This clearly signifies that the bank should focus its attention to the existing loan portfolios by increasing the repayment period and not lend more to both existing as well as new borrowers.

"IT companies had large dependence on BFSI (banking financial services and insurance) sector, which have slowed down. We are now shifting focus to other industries such as manufacturing," said Chandok.

Chanda Kochhar, Joint Managing Director, ICICI Bank, said: "We are monitoring our lending rates on a daily basis. As of now, stability has come back to the system but the deposit rates have not fallen. The cost of funds has not fallen."

ICICI's advances to SME sector comprise of 2 to 3 percent of the total loan portfolio and now the bank seems to a make cautious move even in this lending.