05 December 2019

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SMEs are high potential segment for Axis Bank

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Axis Bank is eyeing to grow loans to the SME sector by 25 percent per annum over the next two years, notwithstanding concerns over their asset quality and a doubtful macroeconomic situation. 

'We will maintain the growth and will grow our SME book by 20 to 25 percent this year and the year after,” Axis Bank President, SME, Rajendra Adsul said. He said lending to SME constituted 15 percent of the bank's overall loan book, which stood at Rs 1.40 lakh crore as on September 30.

Concerns were expressed by bankers in the recent past about the impact on asset quality in SMEs (small and medium enterprises). SMEs have been hit by the Reserve Bank's tight monetary policy. Besides, the slowdown in global markets is also expected to hit their exports. Admitting that higher interest rates were adversely affecting the SME sector, Adsul said the bank itself was not experiencing any stress from its clients, noted the report.

Commercial realty, export-led companies and textiles are among the segments within the SME space which the city-headquartered bank will be wary about, he said, adding that engineering, infrastructure and pharmaceuticals are the spaces that are doing well.

Axis Bank defines the SME companies as the ones having a turnover of less than Rs 150 crore. The SME portfolio contributes 35 percent of the bank's overall priority sector lending requirements as classified by the RBI, he said. Adsul said the bank holds a five percent market share in the overall SME segment, which gives it enough scope to grow. Furthermore, Axis Bank serves the segment through 32 SME Centres and six SME cells, added the report.



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