TransUnion CIBIL Partners with FICCI on a Unique Nation-wide MSME Consumer Education Program

Mumbai, February 18, 2022 – TransUnion CIBIL has partnered with the Federation of Indian Chambers of Commerce & Industry (FICCI) to launch a unique nationwide MSME consumer education program that will support MSMEs in gaining awareness of credit management, CIBIL Rank and commercial credit information. The program objective is to empower MSMEs with knowledge on how to build a good credit history and CIBIL Rank to avail easier and faster access to finance. This program will kick off with MSME clusters in Maharashtra, Assam and Tripura and aims to reach thousands of MSMEs across key MSME clusters in India.

TransUnion CIBIL is committed to supporting banks and credit institutions in sustainable growth of their MSME portfolios while improving reach and driving access to finance for MSMEs. In addition to offering MSME lenders solutions like CIBIL Rank and commercial credit reports for astute lending, TransUnion CIBIL also publishes insights reports like the MSME Pulse in association with SIDBI and the recent Emergency Credit Line Guarantee Scheme (ECLGS) analysis report to support policymakers and the industry with market insights on the MSME sector. CIBIL Rank assigns a rank to the MSME based on its credit history data on a scale of 1-10, CIBIL Rank -  1 being the best possible rank and CIBIL Rank - 10 being the riskiest rank.

Commenting on this partnership, the Chief Operating Officer of TransUnion CIBIL, Ms. Harshala Chandorkar, said: “The MSME sector forms the backbone of India’s economy and can act as a catalyst for growth. Insights show that only about one-third of MSMEs in India are served through the formal credit ecosystem, indicating significant opportunities for increasing credit penetration in this key sector. CIBIL Rank and commercial credit information have played a pivotal role in helping credit institutions formulate risk policies, digitize CIBIL Rank based lending and drive faster, easier and more judicious disbursement of loans to MSMEs. With the launch of this program, we aim to drive even greater awareness amongst MSMEs and empower them to build their CIBIL Rank for accessing faster and affordable financial opportunities”

Speaking about the partnership, Ms. Jyoti Vij, Deputy Secretary General, FICCI, said: “Lack of financial awareness is often cited as one of the key roadblocks for MSME development, which is a high priority segment for India’s economic growth. FICCI is delighted to partner with TransUnion CIBIL, India’s pioneer credit information company and a systemically important entity in our country’s financial infrastructure, on this very crucial program for MSME development. By driving credit awareness amongst MSMEs, we aim to contribute to the government’s endeavors on the resurgence of the MSME sector.”  

To assess the impact of the ECLGS, TransUnion CIBIL recently undertook a loan analysis study* based on ECLGS 1.0 and 2.0 disbursals made up to 31 March 2021. As part of this study, TransUnion CIBIL surveyed MSMEs from across geographies. The survey findings indicate that 65% of MSMEs believe that the ECLGS credit infusion has helped their business through financial troubles and 68% were confident about a future positive outlook**. About 85% of respondents also acknowledged that their TransUnion CIBIL credit history has played a critical role in facilitating ECLGS disbursals.

The liquidity provided under the ECLGS scheme has resulted in a reduction in average credit balances for borrowers availing the scheme. Average balances have dropped by 17% between March 2020 and March 2021 for borrowers availing the scheme compared to a drop of 8% for borrowers not availing the scheme. The very small category of borrowers and micro segment of borrowers reduced their average balance by 33% after availing of the ECLGS facility, whereas small and medium segments showed a balance decrease of 22% and 14% respectively. For all segments, eligible borrowers who did not avail of the facility had a balance decrease of less than 10%.

“With several banks and credit institutions offering better rates of interest for MSMEs with a good CIBIL Rank, it becomes even more vital for MSMEs to understand the composition of CIBIL Rank and its salient features. We believe that this partnership program with FICCI will go a long way in strengthening India’s MSME sector towards its contribution in achieving our economy’s 5 trillion growth objective”, concluded Harshala.

* Based on Emergency Credit Line Guarantee Scheme (ECLGS) data provided by National Credit Guarantee Trustee Company Ltd (NCGTC), TransUnion CIBIL Ltd has conducted the study to access the impact of ECLGS with an objective to see it from the lens of a borrower, lender and sector at large. The study is based on ECLGS 1.0 and 2.0 disbursals made up to 31 March 2021

** Survey conducted by TransUnion CIBIL based on data provided by NCGTC of MSMEs from across geographies. A sample of 756 responses were analyzed and findings included in the report.