Private sector lender YES Bank plans to grow its micro, small and medium enterprise (MSME) portfolio by Rs 500 crore in the January-March quarter.

Due to pressure on the bad loans front across the banking sector, the private sector lender will end the financial year with a MSME loan portfolio of Rs 7,000 crore (Rs 6,500 crore as at December-end 2012) against the target of Rs 7,500 crore.

“MSME lending will be evergreen. We take care of pricing when it comes to NPAs. Our target on MSME loan portfolio was to touch Rs 7,500 crore this fiscal. But we will achieve about Rs 7,000 crore,” Sanjay Agrawal, Senior President, Business Banking, YES Bank.

Currently, the mid-sized bank’s MSME portfolio accounts for around 15 per cent of the total loan book. The total loan book stood at Rs 43,856 crore as on December 31, 2012.

Capacity expansion

Agrawal pointed out that the overall demand for loans is not much in the MSME sector as capacity expansion is not happening. He said MSMEs are being conservative in taking loans as they are largely dependent on the large corporates (for orders) which have not been performing well.

Further, as the bank writes off a loan account the moment it turns bad, the NPAs have been contained at around 0.5 per cent, he added. The automobiles, services and white goods segments are the focus areas for lending for the bank.

“Automobile loans are growing at 16-17 per cent. Services such as hospitals, healthcare, sports, IT and media, among others, are growing very fast at about 30 per cent,” Agrawal said.

YES Bank is focusing on services segment as it is less leveraged and this sector looks very promising in India. Also, tours and travel and logistics (including shipping, transport, etc) are the segments that look bullish,” he added.

beena.parmar@thehindu.co.in

(This article was published on February 13, 2013)
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