msme: MSME loan demand touches 1.6 times the pre pandemic levels: Report

MSME loan demand has touched 1.6 times the pre-pandemic levels thanks largely to the government’s ECLGS scheme according to a report by credit bureau Transunion Cibil and Sidbi.

Demand for MSME- micro, small and medium enterprises- loans measured in terms of number of enquiries has picked up in the last one year and have grown to 1.6 times of pre-pandemic, according to the report by the credit bureau and the MSME lender. Besides improvement in economic activity after the second wave of pandemic, extension of ECLGS scheme, availability of enriched credit data and higher adoption towards digital lending has enabled more MSMEs to access credit, it said. Loan disbursements have doubled compared to pre-pandemic across segments.

Total disbursements amounted to Rs 8 lakh crore in FY’21 & Rs 10.6 lakh crore in FY’22. Disbursements in the micro, small and medium segment increased year-on-year (y-o-y) by 19 percent, 33 percent and 38 percent respectively from FY’21 to FY’22. Disbursements by public sector and private banks increased y-o-y 5% and 14% while those for NBFCs declined YoY by -16% in FY22-Q4. The market share of Private Banks in total disbursements has increased across segments.

The growth in overall MSME borrowers has moderated as lenders are focusing on extending credit to existing borrowers, the report said. Total MSME credit exposure is at ₹23.12 lakh crores as of Mar’22 (FY22-Q4), a y-o-y growth rate of 6.3%. Total live MSME borrowers stand at 7 Million as on Mar’22, amounting to a y-o-y growth of 6%.

After touching a peak of Rs 3.1 lakh crore in Q2 ’21-22, absolute non-performing assets in the MSME sector have come down to Rs2.95 lakh crore as of end Q4’21-22. The rate of decline in NPAs is seen across all micro small and medium enterprises. Till Q3’FY’21, the micro segment had a lower NPA rate than the small segment. However, this trend has now flipped indicating that COVID has impacted the Micro segment the most, the report said.

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