2023-08-11 15:54:20
Delinquency rates excluding legacy accounts with DPD beyond 720 days have gradually declined over the last three years, the credit bureau said. It fell to 2.4 per cent in the March 2023 quarter from 2.9 percent in the same period a year ago. Credit demand picked up 33 per cent in the same period. But data indicates lenders are reluctant to lend as credit supply contracted 1.6 percent.
Delinquency rates dropped across all the three lender categories, public sector banks (PSBs) at 3.0%, non-banking financial companies (NBFCs) at 3.6% and with private banks being the lowest at 1.4%, the credit bureau said.
“The progressive reforms introduced by the government for the MSME sector resurgence have borne fruit as reflected in the vigorous business activity and improved credit uptake in micro and small segments ”said Sivasubramanian Raman, chairman and managing director, Sidbi.
The emerging demand and business conditions should prove conducive to the lenders. “Bridging the demand-supply gap is a priority call-to-action for lenders. With rising demand, improved credit performance and promising economic growth prospects, the time is conducive for lenders to expand their MSME credit portfolios” said Rajesh Kumar, managing director and CEO of Trans Union Cibil.
Indicating the potential to lend to MSMEs, the credit bureau pointed out that India has approximately 630 lakh MSME entities of which only 250 lakh have ever availed credit from formal sources. The number of MSME entities is estimated to have touched 750 lakh by March 2023. Of these, around 500 lakh are expected to be new to credit (NTC) MSMEs. ” Lenders can tap into this vast segment by identifying deserving NTC MSMEs, connecting with them and customizing credit products for their requirements ” Kumar said.Data released by the credit bureau indicates that public sector banks are leading the MSME loan originations in the `micro’ segment where credit exposure is less than Rs 1 crore. Such loans rose 23 percent year-on-year growth in originations value while the `small’ segment, where credit exposure is between Rs 1 crore to Rs 10 crores, grew at 1%. However, originations value in the ‘medium’ segment, where credit exposure is between Rs 10 crore to Rs 50 crore fell by 19% year-on-year.
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