MSME Pulse Quarterly Report: Credit exposure to MSMEs shows improvement

In its report titled, 'MSME Pulse Quarterly Report', TransUnion CIBIL-SIDBI stated on June 20, 2018, that the overall credit exposure has shown the highest growth in the last five quarters at Rs 54.20 lakh crore as on March 31, 2018, with Micro, Small and Medium Enterprises (MSMEs) segment constituting Rs 12.6 lakh crore (23%) of the commercial credit outstanding.

The study noted that this indicates that the credit growth in the MSME sector is improving with the overall exposure reaching the highest level in over a year, and the impacts of demonetisation and GST also seem to be subsiding, according to media reports.

After the lows of September 2017, even large credit exposure of over Rs 100 crore has shown two consecutive quarters of recovery in credit growth. Micro credit of less than Rs 1 crore and SME of Rs 1-25 crore grew by 22% and 13%, respectively, as of March-end this year, the report indicated.

Large corporates contributing to nearly 67% of commercial credit outstanding exhibit a delinquency of 18%, higher than 16% as on March 31, 2017.

The report said the quarterly additions to non-performing assets (NPAs) by the sector showed steepest rise during the second and third quarter of 2017-18.

According to SIDBI Chairman and Managing Director Mohammad Mustafa, "Data unambiguously shows that the MSME segment has clearly left behind the short-term impact of GST and demonetisation. They are firmly back on the growth path with the segment having exposure below Rs 25 crore growing at 25%. High growth in new credit shows positive impact of GST."

Media reports quoting the report stated that the rise in bad loans has moderated in the sector but it is too early to conclude that the problem is close to bottoming out, as also the future NPAs of these MSMEs may be driven by Rs 11,000 crore standard credit exposure but belongs to those companies who have at least one or more credit exposures as NPA by other bank or credit institution.