SIDBI and TransUnion CIBIL launch “MSME Pulse”- India’s largest study based on over 5M entities with active credit accounts
MSME emerges as the most attractive segment in commercial credit with fastest growth and relatively low and stable NPAs
SIDBI in association with TransUnion CIBIL launched “MSME Pulse”- a quarterly report on MSME credit activity, for closely tracking and monitoring the MSME segment in the country. The report is based on a study done on over 5 Million active MSMEs who have access to formal credit, with live credit facilities in the Indian banking system.
Micro, Small and Medium Enterprises (MSME) sector is the most vibrant and dynamic sector promising high growth potential for the Indian economy. There are close to 51 Million MSME units in the country that employ about 117 Million people across various sectors, constituting 40% of the workforce. The MSME share to the total Gross Domestic Product (GDP) is about 37% and they also contribute to 43% of exports based on the data maintained by Ministry of Commerce. In view of the critical nature of this segment, careful monitoring of the health of MSME portfolios regularly and frequently is vital for tracking the efficacy of policy, banking and business decisions while ensuring timely intervention for controlling potential losses.
The key findings of the study reveal that while the overall NPA rate remained range bound from 8% to 11% in the MSME segment during the last 2 years, the NPA rate of large corporates has increased significantly from 7.9% to 16.9% during the same period. Further, there has been a significant increase in the new borrowers entering the formal credit sector which has accelerated from ~2.7 lakhs for the six-month period of Jan to Jun 2016 to ~4 lakhs in Jul to Dec 2017, indicating fresh investments being made. The report, while giving an insight on the prominent MSME sectors for the lending institutions from a risk and profitability perspective, also presents the effects of dual economic disruptions of demonetization and GST along with the impact of relief measures announced by RBI for MSMEs registered under GST.
Speaking at the launch, Shri N S Vishwanathan, Deputy Governor, Reserve Bank of India said, “Comprehensible information is the need of the hour. The MSME sector accounts for 31% of the GDP; providing employment to over 111 million people. Bringing every element of this sector to the formal fold as such is imperative. This is where well-analysed data plays an important and significant role. The MSME Pulse report will help in providing fresh insights about the sector. The joint effort by SIDBI and TransUnion CIBIL is commendable and will bring the MSME sector into the formal fold in a big way.”
Shri Mohammad Mustafa, Chairman and Managing Director, SIDBI in his address said “Information is key to decision making and if it is available at the right time, meaningful engagements and interventions can be made. SIDBI firmly believes that economic tools are very meaningful and offer independent outside assessment hence crucial for supporting policy decisions. With the launch of MSME Pulse, SIDBI and TransUnion CIBIL aim to provide the credit industry with trends and insights for making information oriented business decisions.” While highlighting the present state of formal lending to this segment, he further added that “The MSME sector remains significantly under-penetrated on the organized lending front. Out of the 51 Million MSME units, only 5 Million units have access to formal credit. Digital push coupled with GST implementation will push the MSMEs towards higher formalization and hence credit coverage.”
Mr. Satish Pillai, Managing Director and CEO, TransUnion CIBIL emphasised that “MSME segment, if targeted and serviced appropriately, can grow to have substantial share of Indian bank's commercial balance sheets and profits in the next 3-4 years. A triumvirate of stable risk, high growth and credit spreads along with progressive regulatory support will prove catalyst for sustainable growth. This study will help provide deeper understanding of qualitative and quantitative aspects of MSME lending, across various sub-segments and categories of lenders.”
Small Industries Development Bank of India (SIDBI), is the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of the functions of the institutions engaged in similar activities. The business domain of SIDBI consists of Micro, Small and Medium Enterprises (MSMEs), which contribute significantly to the national economy in terms of production, employment and exports. SIDBI meets the financial and developmental needs of the MSME sector with a Credit+ approach to make it strong, vibrant and globally competitive. SIDBI has adopted thrust on MSE and digital offerings as its mainstay. For more information, visit www.sidbi.in.
About TransUnion CIBIL
TransUnion CIBIL is India’s leading credit information company and maintains one of the largest repositories of credit information globally. We have over 3000 members–including all leading banks, financial institutions, non-banking financial companies and housing finance companies–and maintain more than 1000 million credit records of individuals and businesses.
Our mission is to create information solutions that enable businesses to grow and give consumers faster, cheaper access to credit and other services. We create value for our members by helping them manage risk and devise appropriate lending strategies to reduce costs and increase portfolio profitability. With comprehensive, reliable information on consumer and commercial borrowers, they are able to make sound credit decisions about individuals and businesses. Through the power of information, TransUnion CIBIL is working to support our members drive credit penetration and financial inclusion for building a stronger economy.
We call this Information for Good. For more information visit: www.transunioncibil.com