MSME Segment at INR 16.94 lakh Crores Credit Exposure in 2020: TransUnion CIBIL-SIDBI Report

The report showed the growth rate in MSME credit outstanding has contracted across regions. Sharpest drop in credit observed in Metro and Urban areas
  • BY Jaspreet Kaur

    Feature Writer, BusinessEx

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  • Feb 18,2021
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  • 132 Mins Read

The Indian MSME industry has been severely hampered by the crisis. The industry, which holds a significant share in the Indian economy, wholly disrupted owing to zero customer demands. Despite government's financial assistance, attaining stability in the MSME sector was still difficult. According to a report by TransUnion CIBIL-SIDBI, the growth rate in MSME credit outstanding has contracted across regions. Sharpest drop in credit observed in Metro and Urban areas. Rural and Semi-urban areas have also witnessed slowdown in growth, but at a lower rate in comparison with Metro and Urban areas.

 

           (source: TransUnion CIBIL-SIDBI MSME Pulse)

 

The above-cited graph shows that there is reverse credit growth in various Indian states besides Bihar and Chhattisgarh--showcased a credit growth of 4 per cent and 2 per cent respectively. 

NBFC Losing the Share in the Indian Market 

Traditionally, Public Sector Banks (PSB) have been infusing a large amount in the MSME sector thereby, has become a dominant lender. However, in recent years, private banks and NBFCs have eased credit accessibility for MSMEs and thus, competing PSBs in the credit space. This trend has altered during the pandemic. To aid the MSMEs, the Indian government rolled out various stimulus packages. 

According to the cited report, PSBs have regained market share- from 49.0 per cent  in March 2020 to 51.6 per cent in June 2020. Private Banks continue to expand their market share as well. However, NBFCs have observed a relatively sharp decline in credit outstanding of their portfolios, making them lose market share in the MSME lending industry.

In the present crisis, PSBs continue to be the dominant contributors in providing credit to Micro segment borrowers, holding almost 60 per cent share in this segment. They are playing a critical role in enabling financial inclusion of micro enterprises. The report states that the share of PSBs and private banks in the small segment of borrowers is 47 per cent and 44 per cent respectively. Medium segment, which has the larger ticket size MSME loans, is again dominated largely by PSBs.

 

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