Structural Interventions

MSME Pulse

The need of MSME PULSE

Information is key to decision making and if it is available at the right time, meaningful interventions can be made. 
Since structured data in respect of MSME is not available during the year, no early signs are available to help taking decisions to those who matter and make policies, be it bankers or policy maker A comprehensive document based on close monitoring and tracking of MSME segment providing insights to policy makers, therefore, becomes imperative.
Till date, no such report based on a on a study done on over 5 Million active MSMEs having access to formal credit, with live credit facilities in the Indian banking system, is available.   
While there is some data available with respect to Banks, there is no data in respect to NBFCs.  Further, such data does not tell as to how many new entrepreneurs have accessed credit and what is the situation across different states. The launch of MSME Pulse, a quarterly comprehensive report, is an attempt to fill this gap and aims to provide the credit industry with trends and insights for making information oriented business decisions.

Key Findings of MSME PULSE 6th edition (April– June 2019)

Total credit exposure in India stood at _116.7 Lakh Crores: Total credit exposure stood at `116.7 Lakh Crores as of Mar’19 of which the Corporate segment holds the largest share of 55% and exposure of `64.1 Lakh Crores. The remaining exposure of `52.6 Lakh Crores belongs to Individual Lending, including Consumer Lending, Business Lending and other Retail, Agriculture and Priority Sector lending.


Credit growth resumes in earnest: The year-on-year (YOY) Commercial Credit growth continues to rise clocking 12.4% in the Mar’19 quarter. Large (greater than `100 Crores exposure) segment has shown high credit growth of 11% signaling revival trends. Micro (exposure less than `1 Crore) and SME (`1 Crore- `25 Crores) segments constitute _15.8 Lakh Crores credit exposure (24.9% of Commercial Credit exposure) scaling YOY growth of 19.8% and 15.6% respectively. In comparison it is 5.5% for Mid segment (`25 Crores-`100 Crores) from Mar’18 to Mar’19.


Gujarat tops credit opportunity and risk index in MSME Corporate Segment: Gujarat has emerged as the top ranking state, in terms of performance and credit growth potential for MSME Corporate Lending in India, followed by Andhra Pradesh, Haryana, Karnataka and Delhi. MSME Corporate entities are defined basis the aggregate credit exposure up to `50 Crores. The market size of this category is `17.6 Trillions as of Mar’19. Other states with high potential in MSME Corporate Lending are Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh and Jammu & Kashmir. Andhra Pradesh ranks highest in Market Growth in FY19, ranking improved significantly in Market Growth and Delinquency parameters between FY17 to FY19. Haryana and Karnataka have got equal scores in MSME Ranking, but Haryana fared better in Delinquency and Score Quality of consumers while Karnataka is positioned well in Market size and market growth. The Ranking of Haryana has improved significantly in the Market Growth parameter. Delhi ranks highest in low riskiness of MSMEs measured by better CIBIL MSME Rank of entities.


Gujarat is the best performer in overall credit and 'MSME + Individual Business' lending: Gujarat is the best performer in risk and opportunity parameters of overall lending in India as well as 'MSME Corporate + Individual Business' Lending. Overall lending is defined as total Individual and Commercial lending. 'MSME Corporate+Individual business' segment accounts for total credit to MSME entities and credit to individuals for business purposes. The market size of this category is `29.5 Trillions as of Mar’19. Tamil Nadu, Rajasthan, Delhi and Karnataka are ranked after Gujarat in business purpose loan segment. Other states with high potential in 'MSME Corporate + Individual Business' Lending are Haryana, Maharashtra, Andhra Pradesh, West Bengal and Telangana. In Maharashtra, the rank deterioration between FY16 to FY19 is primarily due to the performance related to delinquency. It slipped from Rank 2 in FY16 to Rank 6 in FY19 because of a high increase in NPA amount and increasing proportion of NPA accounts in both MSME Corporate and Individual Business Loans segment. The Ranking of Tamil Nadu has improved over the last 4 years. It has improved on parameters like delinquency, Market Growth in FY19 compared to previous years.


Continued growth in Individual Lending: Total debt in India has increased at a CAGR of 13.3% to reach the level of _253 Trillions in a five year period from Mar’15 to Mar’19. The total debt includes Government Debt, Debt of Corporate Entities and Individual Borrowers. The growth in aggregate debt in the past four years is powered by a 22% CAGR growth on Lending to Individuals (including Consumer Loan, Business loan to individuals and other loans), 13.4% CAGR of lending to commercial entities (including MSME and Corporate Entities) and a 10.6% of Government Debt. The comparatively higher rate of individual lending has translated into a major shift in the composition of the lending industry in favor of individuals