Micro-businesses have the highest NPAs: OkCredit report

Micro-enterprises have the highest non-performing assets (8.2 percent) in the informal BNPL (Buy Now, Pay Later) scheme, followed by small businesses (5 percent) and medium ones (4 percent), a report by the digital lending app for small businesses OkCredit said.

The report titled, Decoding Informal BNPL, revealed that higher NPAs are due to the small size of credit transactions.

"Shop owners, many times, have a laid back attitude when it comes to the collection of small credit, which later leads to NPAs," the report read.

In terms of geography, micro-businesses in Bihar, Rajasthan, and Madhya Pradesh have the highest NPAs, whereas Jammu and Kashmir was the top performer in terms of credit recovery. NPAs of this region declined from 7.8 percent to 3.4 percent.

The report also delved into the credit behaviour of the small and medium businesses, especially in the wake of the COVID-19 pandemic, which reduced the sale of items on credit and reaffirmed the focus on positive cashflows.

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Commenting on the report's findings, Gaurav Kunwar, Chief Product Officer and Co-founder, OkCredit, said,

"Digital payments have been a catalyst for growth in every sector. But, so far, there has only been anecdotal data to understand its adoption in unorganised retail. With this report, we have outlined pockets of growth in digital payments. The rapid growth of payments on our platform is an indicator of the eagerness of SMBs to latch on to online payments for growth."

The report noted that despite digital payments seeing a rise, SMBs still use cash as the most widely used mode of payment.

Nearly 90 percent of the online payments happen via UPI, and Google Pay leads the segment, followed by PhonePe, Paytm, and Bhim. Paytm is the leader in transactions below Rs 200 and is dominantly present in paan shops.