Connect with us

Hi, what are you looking for?

News

SMEs overleveraging debt, says Rajendran

RajC.V.R. Rajendran, CMD, Andhra Bank, says small and medium enterprises (SMEs) are overleveraging debt. “Debt and equity are complementary to each other. The availability of equity capital is more significant in the present globalised world, as the Indian SMEs have to compete with global players and they are in need of capital at low cost,” he said while addressing a seminar on listing opportunities available for the SME sector. He added that the current working capital requirement of MSME is Rs 22 lakh crore. As they need huge funding for their greenfield and brownfield expansion, this will likely trigger higher listing on SME exchanges.

Raghavan said debt funding has always been the preferred source of financing for the SMEs whereas the capital market offers an alternative long-term financing source. Though banks are dealing with the problem of stressed assets in corporate and SME sectors, the latter still offers room for further lending. Listing of a company on a stock exchange gives better valuation and this would assist in fulfilling their financial requirements to execute their expansion plans, he said. SMEs in India are characterised by low capitalization and limited assets, geographical diversity and high mortality, and poor financial disclosure among other problems, according to him.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Don't miss our updates on your email

Subscribe to our Newsletter

PR Newswire