Maharashtra, Tamil Nadu, Delhi account for nearly two-thirds of MSME loan disbursements
In what can potentially raise concerns over the concentration of finance, a credit information company's data has revealed that nearly two-thirds of loan originations for micro, small and medium enterprises (MSME) in FY22 came from only three states—Maharashtra, Tamil Nadu, and Delhi.
The top 10 states account for 90 percent of the originations value in 2021-22, while Maharashtra, Tamil Nadu, and Delhi make up for 64 percent of the total originations value in FY22, the data released by CRIF High Mark said.
It can be noted that policymakers have identified the MSME sector as one of the main engines taking the economy ahead, and have taken efforts at deepening finance in the sector through a slew of initiatives, including specially designed schemes for the pandemic.
Maharashtra also features among the top three states by origination volume, along with Tamil Nadu and Uttar Pradesh, and also has the largest MSME loan portfolio concentration, it said.
According to the data, the top five districts for MSME advances are Mumbai, Mumbai Suburban, Chennai, Kolkata, and Bengaluru, and collectively make up for 56 percent of the total originations value in FY22.
From an originations by volume perspective, the top five districts are Bengaluru, Mumbai, Pune, Ahmedabad, and Lucknow, it said. From a loan-loss perspective for lenders in the segment, Gujarat, Haryana, and Rajasthan are the most troublesome with 1.7 percent of advances being unpaid for over 180 days, it added.
The overall disbursements to the MSMEs grew five percent to Rs 37.29 lakh crore in FY22 when compared with the year-ago period, but is more than double what was achieved by the industry in FY20, it said. The average ticket size of an MSME loan stood at Rs 72.4 lakh in FY22.
In a press release, Navin Chandani, MD and CEO, CRIF High Mark, said,
“MSMEs are the backbone of the Indian economy, and our data aims to examine the key credit trends emerging for this segment, as we celebrate MSME Day 2022. The fact that total loans disbursed to MSMEs have increased by nearly 50 percent compared to pre-pandemic levels is a clear indication that the lending community is actively supporting the resilience and regrowth of this sector. We will continue to publish rich data & insights to benefit the lending ecosystem for small businesses.”
The small borrower segment had the highest market share by originations value in FY22 at 28.5 percent, followed by Mudra segment at 26.2 percent, it said.
Private banks now account for nearly 70 percent of the MSME loans by value as against just 33 percent in FY20, which is attributable largely to the increase in average ticket sizes, it said.
(Content has been added to this PTI copy for context.)