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The Micro and Small Enterprise (MSME) sector contributes significantly to manufacturing output, employment generation and exports of the country. Considering the large number of MSME units across various segments and industries, this provides an opportunity towards building a profitable loan portfolio. Axis Bank’s MSME policy is focused towards meeting the credit requirements of this segment. In order to target this segment effectively, Axis Bank has built a wide distribution network of micro finance solutions, a strong product offering, simplified appraisal norms and robust credit delivery processes. You can find more about Axis Bank’s MSME policy below.
Manufacturing Sector
Manufacturing sector refers to enterprises engaged in manufacture or production, processing or preservation of goods. The definition of Micro, Small and Medium Enterprises under the manufacturing sector is as below:
Enterprises engaged in providing or rendering of services and whose investment in equipment (original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006) are specified below.
Lending to the MSME segment is primarily done through the SME Department and the Retail Lending (RL) Department of the Bank. Both SME and RL department have officials performing various roles such as Sales, Relationship Management and Credit appraisal. As on date, the Bank does MSME lending through loan centres, Bank Branches, corporate tie-ups & alternate channel arrangements spread out throughout the country.
Timelines for processing of applications
With a view to have a consistent and transparent credit selection process, the following broad parameters are appraised by the Bank:
With a view to enable quick credit decisioning at the local level, officials located at various locations are vested with sanctioning power up to limits that are defined in the Corporate Credit Policy/ Delegation of Financial powers. This ensures that credit decisions up to the defined limits are taken at the local level enabling faster credit delivery to the MSME borrower.
Appraisal and credit rating norms
Working capital limits that are sanctioned to borrowers are renewed once in 12 months. Information that is required from the borrower (such as audited financials, estimated financials for the current year, orders on hand, etc) to renew the limits is sought prior to the renewal. In cases where the borrower has not finalized the audited financials for the previous FY, the provisional financials are obtained from the borrower in order to renew/ enhance limits. Midterm review of limits sanctioned to borrower is also done in order to re-assess the credit requirement of the borrower, which may have changed during the course of the year.
The interest rate/ processing fee/ transaction charges that are charged to the customer is decided on the basis of a number of factors including a) Credit rating of the borrower, b) availability of collateral security, c) business model of the entity and d) satisfactory market reference.
In addition to the various steps taken to establish borrower’s credit worthiness at the pre-sanction stage, we monitor the health of the account on a continuous basis at various levels. At periodic intervals, we obtain stock statements from customers and observe the position of stocks and receivables for Cash Credit borrowers. Unit inspections are also done multiple times in a given year. We also use analytics in order to study the transactions of the borrower in order to obtain early warning signals on the health of a particular account. Early warning signals are also monitored at a portfolio level.
System driven MIS is published at regular intervals to monitor the growth of MSME advances. Based on the same, region-wise growth is reviewed and evaluated with the concerned officials. Region specific strategies and activities are planned accordingly for growing MSME advances in line with the organizational goals.
Loans are appraised and sanctioned to borrowers who fall eligible for subsidy as per the Credit Linked Capital Subsidy Scheme and various other schemes that are applicable for MSME borrowers.
The Bank follows fair practices with regards to collection of dues & repossession of security by fostering borrower confidence & long term relationship.
The main objective of the Bank’s NPA Management & Recovery policy is to reduce the level of NPAs and to maximise recoveries from the pool of NPAs within the shortest possible time. To achieve the above objective, the following broad strategies are followed.
The Bank is committed to extend the best possible services to its customers. Grievance Redressal policy of the Bank is mentioned on the Banks website. The MSME customers can utilize different channels i.e Branches/ Loan centres/ SME centres/ Phone Banking to reach to the bank and submit the grievance. We also have an online grievance recording system whereby all borrowers (including MSME borrowers) availing facilities can lodge their complaint on the Bank’s website. Contact details of the concerned officials are given and any complaint received is dealt with at the earliest.
Bank imparts training to credit analysts on a regular basis to upgrade their appraisal skills. The Sales/ Relationship managers are also imparted soft skills. Staff handling MSME clients is also sensitized on the various schemes/products offered to MSME borrowers. Bank shall also endeavor to set up a program to impart knowledge to MSME units on various topics of relevance such as marketing, accounting, business planning, etc.
