TransUnion CIBIL- SIDBI MSME Pulse Quarterly Report shows broad
based recovery in commercial credit growth..!
While MSME segment continues with strong growth and stable asset
quality, report shows further deterioration in the large corporate segment
Mumbai, 20 June, 2018:
The second edition of TransUnion CIBIL- SIDBI MSME Pulse Report reveals that overall
commercial credit exposure (Y-o-Y) has shown the highest growth rate in the last
five quarters. The report further states that the total on-balance sheet
commercial lending exposure in India stood at ₹ 54.2 lakh crores, as of March
2018 with Micro and SME segment constituting
₹ 12.6 lakh crores, which contributes to ~23% of commercial credit outstanding.
Large corporates contributing to ~67% of commercial credit outstanding exhibits
a delinquency rate of 18% in March 2018, which was around 16% in March 2017. The
quarterly additions to NPA show steepest rise between Q2FY’18 to Q3FY18. While the
growth in NPA rate has moderated, it is too early to conclude that the NPA
problem is close to bottoming out. MSME Pulse closely tracks and monitors the
MSME segment in the country, on a quarterly basis. TransUnion CIBIL Commercial
Bureau has over 5 million business entities ranging from
proprietorship/partnership firms to publicly listed entities. The credit data
is updated monthly with exposure and performance details from Banks, NBFC, HFC,
Cooperative banks, Regional Rural banks and other regulated lenders.
Speaking
of this report, Mr. Mohammad Mustafa, Chairman and Managing Director, SIDBI said “The use of credit bureau data insights has
enabled monitoring of systemic risks based on comprehensive, granular and
prompt data. MSME Pulse is SIDBI’s joint endeavour with TransUnion CIBIL for
providing the policy makers, regulators and Industry with precise data-driven
insights to support policy as well as business decisions.” On the second
edition findings of the report he added, “Data unambiguously shows that the
MSME segment has clearly left behind the short-term impact of GST and demonetisation.
They are firmly back on growth path with the segment having exposure below INR
25 crore growing at 15%. High growth in new to credit shows positive impact of
GST. The report finds that RBI’s dispensation to MSME which includes
recognising NPA in 180 days as opposed to previous approach of tagging NPA in
90 days past due will bring relief to INR 15,000 crore of exposure”
In
the quarter ending Mar’18, new-to-credit (NTC) borrowers were at 2.7 lakhs
whereas H1-2018 is expected to have 5 lakh plus NTC business borrowers. This is
21% higher than the NTC observed in H2-2017 (~4 lakhs). Speaking of this
observation, Mr. Satish Pillai, Managing Director and CEO, TransUnion CIBIL further
explained “The combination of high credit
demand and relatively low NPA rates make MSME among the most attractive target
segment for institutional lenders. MSME Pulse report projects that formalization
of commercial credit will be able to add a million a year New-to-Credit (NTC)
MSME borrowers. NTC portfolio study suggests that 60% first-time borrowers sustain
or increase their credit in the two-year period following their first formal
loan and therefore it is vital to monitor this segment of NTC borrowers
regularly for profitable business growth.”
MSME Pulse Second Quarter Edition Highlights
· Broad based recovery in credit growth-Overall credit exposure(Y-o-Y) has shown the highest
growth rate in last five quarters. In addition, after the lows of September
2017, even Large (greater than ₹ 100 Crores
exposure) segment has shown two consecutive quarters of recovery in
credit growth. Micro (credit exposure
less than ₹ 1 Crore) and SME (₹ 1 Crore-25 Crores) segments constitute ₹ 12.6 lakh Crores credit exposure (23% of
commercial credit outstanding) with Y-o-Y growth of 22% and 13%
respectively .In comparison 7% for Mid (₹ 25
Crore-100 Crores) and 6% for Large (greater than ₹
100 Crores exposure) from March 2017 to March 2018.
· Large segment asset deterioration continues, Mid
segment NPA rate restricted- In Large corporate segment, NPA rates have increased from 15.3% (in
Mar’17) to 18% (in Mar’18).The directional reduction in NPA rate of Mid segment
(16.3% in Mar’17 to 15.9% in Mar’18) may be attributed to bad debt being sold
to Asset Reconstruction Companies(ARC) and uptick in loan growth in this
segment. The stock of gross NPA in commercial exposure
increased by 1.48 Lakh Crore in Mar’18 over Mar’17. However, quarterly
additions to NPA suggest that the steepest rise was between Q2FY’18 to Q3FY18,
While the growth in NPA rate has moderated, it is too early to conclude that
the NPA problem is close to bottoming out.
· Relatively stable asset quality for MSMEs: MSME NPA
rates have remained stable and range bound. In the Micro segment the NPA rate
has moved from 8.9 % (in Mar’17) to 8.8 % (in Mar’18) .In SME segment the NPA
rate hovered between 11.4% (in Mar’17) to 11.2 % (in Mar’18). Recognized NPA
exposure for MSME is ₹ 81,000 Crores as
on Mar’18
· Growth to ensure asset quality: Future NPA in the segment may be driven by ₹ 11000 Crores exposure, which are currently
tagged as ‘standard’ but belongs to entities that have at least one or
more exposures tagged as NPA by other bank or credit institution. Additionally,
there is a system-side exposure of ₹120,000
Crores belonging to entities with CIBIL MSME Rank (CMR) between CMR 7 and CMR
10. CMR7 to CMR10 are associated with High Risk. These high-risk
exposures are expected to add ₹16,000
Crores in NPA by March 2019. However, strong credit demand in this segment
among other things driven by formalization of this segment is likely to keep
the overall NPA rate in this segment in check.
· New Private Banks most successful in tapping MSME
opportunity: Private
Banks and NBFCs have further increased their market share in Micro and SME
lending from 27.5% and 9.1% in March 2017 to 30.3% and 10.9% in March 2018.
Share of PSBs has fallen from 57% to 50.4% in the same period. Despite higher
growth rate new Private Banks have better quality of acquisition of New to Bank
(NTB) borrowers with 46% borrowers lying in high quality CMR 1 to CMR3. In
comparison, other category of lenders have around 35% of their incremental
borrowers in CMR1 to CMR 3.
New Private
Sector Banks have 9% NTB acquisition in CMR-7 to CMR-10 grades compared to 16%
in PSBs and 14% in NBFCs. However, New Private Banks and NBFCs lending to these
high risk borrowers are largely offering asset backed loans, while PSU banks
are offering plain working capital and term loans even to this segment.
· Formalization may add a million a year New-to-Credit
MSME borrowers: Number
of new-to-credit (NTC) borrowers in MSME segment continued to accelerate with 5
lakh NTCs estimated in H1-18 compared to 4 lakhs in H2-17. In effect going
forward, it may be expected that annually, at least a million plus NTC MSME
borrowers would be seeking formal credit. Recent NTC portfolio study suggest
that 60% first-time borrowers sustain or increase their credit, in the two-year
period following their first formal loan.
· Demonetization and GST Impact are firmly behind the
MSMEs: As of Mar’18
based on the credit utilization exposure, the metrics used to gauge the impact
in this study, it appears that most MSME’s including the smallest ones have
recovered from the impact of demonetization and GST.
· Risk Profile study of top 30 locations: A study of risk
profile of top 30 locations by CMR distribution of borrowers shows that
locations in North and West regions have a comparatively better risk profile
than the locations in South and East.
About SIDBI
Small Industries Development Bank of India (SIDBI), is the Principal
Financial Institution for the Promotion, Financing and Development of the
Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of the
functions of the institutions engaged in similar activities. The business
domain of SIDBI consists of Micro, Small and Medium Enterprises (MSMEs), which
contribute significantly to the national economy in terms of production,
employment and exports. SIDBI meets the financial and developmental needs of
the MSME sector with a Credit+ approach to make it strong, vibrant and globally
competitive. SIDBI has adopted thrust on MSE and digital offerings as its
mainstay. For more information, visit www.sidbi.in.
About
TransUnion CIBIL
TransUnion
CIBIL is India’s leading credit information company and maintains one of the
largest repositories of credit information globally. We have over 3000
members–including all leading banks, financial institutions, non-banking
financial companies and housing finance companies–and maintain more than 1000
million credit records of individuals and businesses.
Our
mission is to create information solutions that enable businesses to grow and
give consumers faster, cheaper access to credit and other services. We create
value for our members by helping them manage risk and devise appropriate
lending strategies to reduce costs and increase portfolio profitability. With
comprehensive, reliable information on consumer and commercial borrowers, they
are able to make sound credit decisions about individuals and businesses.
Through the power of information, TransUnion CIBIL is working to support our
members drive credit penetration and financial inclusion for building a
stronger economy.
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