TransUnion CIBIL- SIDBI MSME Pulse Quarterly Report signals speedier credit growth revival

Rapid increase in MSME lending – 19.3% CAGR between Dec’13 to Dec’18 signalling increasing financial inclusion

10.1 lakh New-to-Credit (NTC) MSME corporate borrowers added in the year 2018

Mumbai, 11 April, 2019: The fifth edition of TransUnion CIBIL- SIDBI MSME Pulse Report shows that commercial credit growth has continued to rise at 14.4% year-on-year (YOY) in the quarter ending Dec ’18. The total on-balance sheet credit exposure in India stood at ₹ 111.1 Lakh Crores as of Dec’18 of which MSME credit accounts for 25.2 Lakh Crores, including credit to MSME entities and credit to individuals for business purposes. The report indicates that aggregate MSME lending (to both entities and individuals) has expanded rapidly over the last five years with the total balance outstanding increasing at a compounded annual growth rate (CAGR) of 19.3%. The non-performing assets (NPA) rates have also shown a gradual reduction with NPAs in the Large segment declined from 20% in Jun’18 to 19% in Dec’18 and the NPA rate for the MID segment declined from 18% in Jun’18 to 16.5% in Dec’18.

MSME Pulse is a quarterly analysis report based on the TransUnion CIBIL Commercial Bureau data which has over 7 million live business entities ranging from proprietorship/partnership firms to publicly listed entities. The credit data is updated monthly with exposure and performance details from Banks, NBFCs, HFCs, Cooperative banks, Regional Rural Banks and other regulated lenders.

Speaking on this report, Mr. Mohammad Mustafa, Chairman and Managing Director, SIDBI said: “MSME credit growth acceleration along with a decline in NPAs is a very promising indicator of the prospective development in the segment and thereby economic growth. The insights from this edition of MSME Pulse also indicate growth in New-to-Credit MSME borrowers implying that MSMEs are increasingly seeking access to finance from the credit sector. These trends bode well for the ease of doing business in India as more and more MSMEs seek credit from the regulated market and this also helps foster financial inclusion.”

One of the key highlights from this edition of MSME Pulse is the landmark improvement in lending intensity observed on MSME credit. The analysis suggests that over the last 5 years, aggregate MSME lending as a proportion of the GDP has increased by around 400 basis points (bps) to reach 13.6% in Dec’18 from 9.6% in Dec’13. The rapid increase in MSME lending intensity has been driven by a 130 bps and 260 bps improvement in lending to entities and individuals respectively. It is noteworthy that MSME lending – as measured by MSME loans outstanding divided by MSME GVA (Gross Value Added) – has moved up from 32.2% in Dec’13 to 47.6% in Dec’18 – a landmark increase of 15.4 percentage points (pps). This growth has been driven by an increase of 5.8 pps in lending to entities and 9.7 pps in lending to individuals.

Commenting on this growth in lending intensity, the Managing Director and CEO of TransUnion CIBIL, Mr. Satish Pillai, said: “We have observed significant acceleration in lending in the past couple of years but growth of this magnitude needs to be monitored carefully as rapid acceleration in debt build-up may indicate prospective stress in the system. While lenders should monitor their portfolios constantly for loan stacking, leverage and debt build-up, the regulators must keep systemic risks in check.”

Adding to this, Mr. Pillai also reemphasized the need for inclusion of alternative data sources in mainstream credit bureau database, “In order to enable system-wide faster and cheaper access to credit by MSMEs, credit information companies must be allowed to access trade credit data from TReDS and also enable mandatory reporting by banks of factoring/bill discounting to bureaus. Inclusion of alternative data in mainstream bureau database will not only help drive access to finance for many more deserving MSMEs but also enable improved monitoring and surveillance of credit-risk.”

MSME Pulse Fourth Quarter Edition Highlights

  • Total credit exposure in India stands at ₹111.1 Lakh Crores: Total credit exposure stood at 111.1 Lakh Crores as of Dec’18. The mid and large corporate segment holds the largest share of 43% and exposure of 47.5 Lakh Crores. Consumer lending (retail, agriculture and priority sector lending) is the second biggest segment with a share of 35% and exposure of 38.4 Lakh Crores. The MSME segment (business lending to both corporate entities and individuals) stands third with a share of 23% of the aggregate pie.
  • Credit growth resumes in earnest: The year-on-year (YOY) commercial credit growth continues to rise clocking 14.4% in the Dec’18 quarter. Large (greater than 100 crores exposure) segment has shown very high credit growth of 14.9% signalling revival trends. Micro (exposure less than 1 Crore) and SME (1 Crore-25 Crores) segments constitute 14.8 Lakh Crores credit exposure (23.7% of commercial credit exposure) scaling YOY growth of 19.2% and 15.9% respectively. In comparison it is 5.0% for MID (25 Crores-100 Crores) from Dec’17 to Dec’18.
  • Banking Sector on the way to recovery: After a long period of stress, the banking sector seems to be on the course to recovery as the NPA rates have started showing a gradual decline. The NPA rate reached its peak in the period between Mar’18 to Jun’18 for MID and Large segment. We witnessed a reduction in the NPA rate for the Large segment from 20% in Jun’18 to 19% in Dec’18. Similarly, the NPA rate for the MID segment declined from 18% in Jun’18 to 16.5% in Dec’18.
  • MSME credit growth on a firm footing: Aggregate MSME lending (both entities and individuals) has expanded rapidly over the last five years. Total balance outstanding has increased from 10.4 Lakh Crores in Dec’13 to 25.2 Lakh Crores in Dec’18 – a compounded annual growth rate (CAGR) of 19.3%. The growth in aggregate MSME lending in over the last five years has been powered by a 15.7% CAGR of lending to entities and a 26.1% increase in business lending to individuals.
  • PSBs Share in MSME lending has been reducing: The market share of PSBs (Public Sector Banks) in MSME lending (both entities and individual segment) has reduced from 58% to 39% in 5 years period from Dec’13 to Dec’18. PSBs continue to be the single biggest lender to MSMEs but the gap between the PSBs and the Private (PVT) segment has narrowed from a significant 37 pps in Dec’13 to just about 7 pps in Dec’18. However, going forward, we would expect that the PSBs would be able to claw back some of the share losses as more PSBs come out of the PCA framework. Their market share growth will also be aided by the continued funding constraints being experienced by the NBFC segment.


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

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.

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