Home » MSME » 2nd Edition of MSME Pulse Report by SIDBI-TransUnion CIBIL for June 2018 Quarter released

2nd Edition of MSME Pulse Report by SIDBI-TransUnion CIBIL for June 2018 Quarter released

Small Industries Development Bank of India (SIDBI), a premier Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and TransUnion CIBIL, a Credit Information Company, in a joint endeavor with TransUnion CIBIL brings-out MSME Pulse, a Quarterly Report on MSME Sector, for providing the policy makers, regulators and industry with precise data-driven insights to support policy as well as business decisions. The First Edition was released in the month of March, 2018.

The 2nd Edition of MSME Pulse by SIDBI-TransUnion CIBIL for June 2018 quarter has now been released. The findings show that the overall commercial credit exposure (Y-o-Y) has shown the highest growth rate in the last five Quarters.

MSME Pulse Report by SIDBI-TransUnion CIBIL further states that the total on-balance sheet commercial lending exposure in India stood at Rs.54.2 lakh crores, as of March 2018 with Micro and SME segment constituting Rs.12.6 lakh crores, which contributes to ~23% of commercial credit outstanding. While the growth in NPA rate has moderated, it is too early to conclude that the NPA problem is close to bottoming out.

Data in MSME Pulse report by SIDBI-TransUnion CIBIL shows that the MSME segment has left behind the short-term impact of GST and demonetisation and they are firmly back on growth path with the segment having exposure below INR 25 crore growing at 15%. High growth in new to credit shows positive impact of GST. New-to-credit (NTC) borrowers are expected to be 5 lakh plus from April,18 to September 2018, which is 21% higher than NTC observed from October, 2017 to March, 2018.

To sum-up, the second edition of MSME Pulse Report by SIDBI-TransUnion CIBIL reveals a broad based recovery in commercial credit growth and also shows that MSME segment continues with strong growth and stable asset quality.

Highlights of MSME Pulse Second Quarter Edition are as follows:

 

MSME Pulse Second Quarter Edition Highlights

  • Broad based recovery in credit growth-Overall credit exposure(Y-o-Y) has shown the highest growth rate in last five quarters. In addition, after the lows of September 2017, even Large (greater than ₹ 100 Crores exposure) segment has shown two consecutive quarters of recovery in credit growth.  Micro (credit exposure less than ₹ 1 Crore) and SME (₹ 1 Crore-25 Crores) segments constitute ₹ 12.6 lakh Crores credit exposure (23% of commercial credit outstanding) with Y-o-Y growth of 22% and 13% respectively .In comparison 7% for Mid (₹ 25 Crore-100 Crores) and 6% for Large (greater than ₹ 100 Crores exposure) from March 2017 to March 2018.

 

  • Large segment asset deterioration continues, Mid segment NPA rate restricted- In Large corporate segment, NPA rates have increased from 15.3% (in Mar’17) to 18% (in Mar’18).The directional reduction in NPA rate of Mid segment (16.3% in Mar’17 to 15.9% in Mar’18) may be attributed to bad debt being sold to Asset Reconstruction Companies(ARC) and uptick in loan growth in this segment.  The stock of gross NPA in commercial exposure increased by 1.48 Lakh Crore in Mar’18 over Mar’17. However, quarterly additions to NPA suggest that the steepest rise was between Q2FY’18 to Q3FY18, While the growth in NPA rate has moderated, it is too early to conclude that the NPA problem is close to bottoming out.

 

  • Relatively stable asset quality for MSMEs:  MSME NPA rates have remained stable and range bound. In the Micro segment the NPA rate has moved from 8.9 % (in Mar’17) to 8.8 % (in Mar’18) .In SME segment the NPA rate hovered between 11.4% (in Mar’17) to 11.2 % (in Mar’18). Recognized NPA exposure for MSME is ₹ 81,000 Crores as on Mar’18

 

  • Growth to ensure asset quality: Future NPA in the segment may be driven by ₹ 11000 Crores exposure, which are currently tagged as ‘standard’ but belongs to entities that have at least one or more exposures tagged as NPA by other bank or credit institution. Additionally, there is a system-side exposure of ₹120,000 Crores belonging to entities with CIBIL MSME Rank (CMR) between CMR 7 and CMR 10. CMR7 to CMR10 are associated with High Risk. These high-risk exposures are expected to add 16,000 Crores in NPA by March 2019. However, strong credit demand in this segment among other things driven by formalization of this segment is likely to keep the overall NPA rate in this segment in check.

 

  • New Private Banks most successful in tapping MSME opportunity: Private Banks and NBFCs have further increased their market share in Micro and SME lending from 27.5% and 9.1% in March 2017 to 30.3% and 10.9% in March 2018. Share of PSBs has fallen from 57% to 50.4% in the same period. Despite higher growth rate new Private Banks have better quality of acquisition of New to Bank (NTB) borrowers with 46% borrowers lying in high quality CMR 1 to CMR3. In comparison, other category of lenders have around 35% of their incremental borrowers in CMR1 to CMR 3.

New Private Sector Banks have 9% NTB acquisition in CMR-7 to CMR-10 grades compared to 16% in PSBs and 14% in NBFCs. However, New Private Banks and NBFCs lending to these high risk borrowers are largely offering asset backed loans, while PSU banks are offering plain working capital and term loans even to this segment.

  • Formalization may add a million a year New-to-Credit MSME borrowers: Number of new-to-credit (NTC) borrowers in MSME segment continued to accelerate with 5 lakh NTCs estimated in H1-18 compared to 4 lakhs in H2-17. In effect going forward, it may be expected that annually, at least a million plus NTC MSME borrowers would be seeking formal credit. Recent NTC portfolio study suggest that 60% first-time borrowers sustain or increase their credit, in the two-year period following their first formal loan.

 

  • Demonetization and GST Impact are firmly behind the MSMEs: As of Mar’18 based on the credit utilization exposure, the metrics used to gauge the impact in this study, it appears that most MSME’s including the smallest ones have recovered from the impact of demonetization and GST.

 

  • Risk Profile study of top 30 locations:  A study of risk profile of top 30 locations by CMR distribution of borrowers shows that locations in North and West regions have a comparatively better risk profile than the locations in South and East.

About Indianindustry Media

Leave a Reply

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

*

x

Check Also

Government Blocks 118 Mobile Apps Which are Prejudicial to Sovereignty and Integrity of India, Defence of India, Security of State and Public Order

The Ministry of Electronics and Information Technology, Government of India invoking it’s power under section ...

India will play a leading role in the future global political framework in terms of economy and Disaster Risk Management:Nityanand Rai

  The Union Minister of State for Home Affairs, Shri Nityanand Rai has said that ...

Ministry of Shipping has facilitated more than 1 lakh crew change in Indian ports and charted flights

Ministry of Shipping has facilitated more than 1,00,000 crew change on Indian ports and through ...

Structural Reforms are a Key Priority of the Government: Finance Minister

Addressing the captains of the Indian Industry, Union Minister of Finance and Corporate Affairs, Smt. ...

Government of India and AIIB sign agreement for $500 million to improve the network capacity, service quality and safety of the suburban railway system in Mumbai

The Government of India, the Government of Maharashtra, Mumbai Railway Vikas Corporation and the Asian ...

DRDO identifies 108 Systems and Subsystems for industry to design, develop and manufacture towards achieving “Atmanirbhar Bharat”

Responding to the clarion call given by Hon’ble Prime Minister for “Atmanirbhar Bharat”, the Defence ...

Shri Gadkari Asks Large Industries to Clear MSME Dues on Priority; Develop MMSE ancilliary industries for spares

Shri Nitin Gadkari, Union Minister for Micro, Small and Medium Enterprises (MSMEs) and Road Transport ...

Sector and Industry wise study of ground level issues for policy formulation is the need of the hour: Shri Nitin Gadkari

Shri Nitin Gadkari, Union Minister for Micro, Small & Medium Enterprises and Road Transport & ...

Tax system aims to be Seamless, Painless, Faceless : PM

Prime Minister Shri Narendra Modi launched a platform for “Transparent Taxation – Honouring the Honest” ...

DAC approves procurement proposals worth Rs 8,722.38 crore, including 106 Basic Trainer Aircraft for IAF

To strengthen the Armed Forces by relying on indigenous capability to take forward the initiative ...

WP2Social Auto Publish Powered By : XYZScripts.com