The recent TransUnion CIBIL- SIDBI pulse report on Micro, Small and Medium Enterprises (MSMEs) revealed that the Non-Performing Asset (NPAs) rate of commercial lending went up to 17.5 percent in September 2018 compared to 15.5 percent in September 2017, according to media reports.
For the report, the MSME segment with borrowers having aggregate exposure of Rs 10 lakh to Rs 10 crore were studied by TransUnion-CIBIL and SIDBI. The report showed that NPA rates for micro enterprises reduced to 8.5 percent from 8.7 percent over the same period. Further, NPAs in SMEs reduced minimally to 11.3 percent from 11.4 percent.
The report also emphasised on stacking. Default rates for borrowers who take a number of loans from multiple lenders within 60 days (stackers), went up to 4.4 percent from 2.5 percent. The report added that these stacked loans are at a greater risk of turning into NPAs. These are observed in loans sanctioned by finance companies such as NBFCs.
The pulse report showed that 45 percent of the sanctions showing loan stacking behaviour belonged to loans sanctioned by NBFCs and 23 percent of borrowers who have taken loans from NBFCs fall in this category.
Other findings include:
The growth rate in credit exposure is higher than the growth in gross NPA amount in the MSME segment. This impacts the gross NPA rate.
The gross NPA amount has increased by 75 percent in the large segment over two years from September 2016 to September 2018.
In the commercial MSME segment, NPA rates are higher for larger exposures. However, the very small segment also has shown higher NPAs.
The NPA rate for MSME loans taken in an individual capacity (around two percent) is significantly lower compared to MSME loans to entities (eight to 14 percent).