A STUDY ON FINANCIAL INSTITUTIONS OF FINANCING SMALL SCALE INDUSTRIES AT AXIS BANK

Abstract

Small scale industries (SSIs) form the backbone of India's industrial economy, contributing approximately 30% of GDP, 45% of manufacturing output, and employing over 110 million people across diverse sectors including textiles, food processing, engineering goods, chemicals, and handicrafts. Despite their economic significance, SSIs face chronic financing constraints arising from limited collateral, inadequate credit histories, weak financial documentation, and the risk aversion of formal financial institutions toward small borrower segments. Axis Bank, India's third largest private sector bank by assets, has emerged as a significant financier of small scale industries through specialised MSME credit products, government scheme linkages, supply chain financing, and digital lending platforms. This study examines the role of financial institutions, with particular focus on Axis Bank, in financing small scale industries, analysing product offerings, credit appraisal methodology, loan performance, financial inclusion impact, and operational challenges. Primary data was collected through structured questionnaires administered to 110 respondents comprising Axis Bank MSME credit officers, SSI entrepreneurs, and industry association representatives. Secondary data was sourced from Axis Bank Annual Reports (2021– 2024), RBI MSME credit reports, Ministry of MSME publications, SIDBI financing data, and academic literature on SSI financing in India. Findings reveal that Axis Bank has expanded its MSME loan book from ₹78,420 crore to ₹1,12,650 crore over the study period, with 68% of new SSI customers acquired through government scheme linkages, collateral-free CGTSME guarantee coverage, and digital onboarding platforms reducing loan processing time from 21 days to 7 days. Recommendations address collateral framework modernisation, digital credit scoring adoption, and government scheme disbursement acceleration for enhancing SSI financing effectiveness.