Banks, NBFCs can consider more lending to this segment

KR Srivats Credit information company TransUnion CIBIL sees the non-performing assets (NPA) situation on MSME loans as “stable” and “not rising” over the past six to eight quarters.

This (MSMEs) can be looked at as a segment where banks and NBFCs can now go in for more lending, Harshala Chandorkar, Chief Operating Officer, TransUnion CIBIL, told BusinessLine here.

“We are seeing credit growth to MSMEs. While NPAs to this segment are not low, they are definitely not rising. They are stable,” Chandorkar said.

MSME lending has grown in the past five years. And given the structural strength of this segment, combined with the tailwinds of growing large corporate sector with declining NPA rates, one may see MSME lending gain further intensity, according to CIBIL.

Though the share of public sector banks (PSBs) in MSME lending has been shrinking, digitisation and getting out of prompt corrective action (PCA) framework are likely to boost their activities in the MSME segment.

As for MSME lending to the commercial entities segment, the share of PSBs has declined from over two-thirds of the market in December 2013 to less than half of the market in December 2018. The biggest beneficiaries of this trend have been the private banks and NBFC players.

Both the private and NBFC segments have gained market share by around 4 percentage points each over the past five years on account of a decline in the share of the PSBs and the ‘Others’ segment.

Published On : 19-07-2019

Source : The Hindu Businessline