Micro segment emerges as a promising growth driver : TransUnion CIBIL-SIDBI MSME Pulse Report

Micro segment emerges as a promising growth driver

Findings from this edition of TransUnion CIBIL-SIDBI MSME Pulse Report indicate that on-balance sheet exposure across most sub-segments of MSME lending has reduced in the last few quarters, however micro segment (aggregate credit exposure <1cr) is emerging with fresh disbursals to the tune of ₹92.3 K crores made to this segment in the calendar year 2019.

Public Sector Banks (PSBs) and Private Banks have roughly equal share in new credit disbursed to the Micro segment borrowers. However, when looking at granular segmentation then the Very Small segment (aggregate exposure <10L) is dominated by PSBs and the Micro-2 (aggregate exposure 50L to 1CR) is dominated by Private Banks.

Fresh disbursals in the Micro segment are also observed across states. The top 15 states account for over 80% of total credit disbursals in 2019, by amount. Maharashtra and Tamil Nadu together account for over 1/5th of the fresh disbursals. The highest rate growth in fresh disbursals in 2019 over 2018 was observed for Rajasthan, while lowest growth happened in Odisha, among the top 15 states.

The NPA rate for the Micro segment at 9% has been lower than the Small and Medium segments which was at 11%. NPA rates are highest for medium sized MSMEs at 18% across all lenders.

“The Micro segment can be the next growth driver for the economy and credit institutions must capitalize on this opportunity by identifying the Micro segment entities that have stood strong through the past disruptions and fund them during these times. 

Banks and credit institutions can play a pivotal role in fortifying the MSME sector and revitalize the economy by making astute lending and policy decisions based on sectoral data insights,” observed Mr. Mohammad Mustafa, Chairman and Managing Director, SIDBI.

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