The share of public sector banks in lending to micro, small and medium enterprises (MSME) has been declining although overall lending to the sector has expanded rapidly.

According to the TransUnion CIBIL-SIDBI MSME Pulse quarterly report, the market share of public sector banks in MSME lending (both entities and individual segment) has reduced from 58 per cent in December 2013 to 39 per cent in December 2018.

Private banks make a mark

The data comes at a time when the government has been pushing its ambitious MUDRA scheme to boost such enterprises and create employment and private sector banks have also been getting increasingly attracted to the sector.

The report, however, noted that PSBs continue to be the single biggest lender to MSMEs. However, private sector banks now have 33 per cent of the market share in lending to the sector in December 2018 from a mere 22 per cent in December 2013.

“Going forward, we would expect that the PSBs would be able to claw back some of the share losses as more PSBs come out of the PCA framework. Their market share growth will also be aided by the continued funding constraints being experienced by the NBFC segment,” the report said.

Aggregate lending up

It also noted that aggregate lending to MSMEs has risen by a compounded annual growth rate of 19.3 per cent over the last five years. Of the total on-balance sheet credit exposure in India of ₹111.1 lakh crore as of December 2018, MSME credit accounted for ₹25.2 lakh crore.

The analysis also revealed that over the last five years, aggregate MSME lending as a proportion of the GDP has increased by around 400 basis points to reach 13.6 per cent in December 2018 from 9.6 per cent in December 2013.

 

Published On : 11-04-2019

Source : The Hindu Businessline