MUMBAI: As risk-averse banks shy away from lending, an analysis of loan defaults reveals that delinquencies among micro, small and medium enterprises (
MSMEs) continue to be lower than large corporations.
Credit bureau
Trans-Union Cibil has said that two out of three MSMEs entered this lockdown with structurally strong positions. Of these, about half are very strongly positioned.
The total lending to businesses in India stood at Rs 64.45 lakh crore as of January 2020, of which the MSME segment holds a Rs 17.75-lakh-crore credit exposure. The large corporates segment’s credit exposure is at Rs 46.7 lakh crore and this has had a year-on-year expansion of 6.3%. In January, the
non-performing asset (NPA) rate for large corporates was at 19.7%, while the NPA rate in the MSME segment stood at 12.5%.
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. These findings strengthen the case for support of credit flow to the MSME segment, which is facing a liquidity issue due to the absence of sales even as these enterprises have to meet fixed costs of salaries, rent and maintenance.
TU Cibil said public sector banks accounted for 40% of fresh disbursals in 2019 in the micro segment, followed by private banks (38%) and
NBFC (22%). This segment saw fresh credit disbursals worth Rs 92,262 crore in 2019.