Commercial credit to micro, small and medium enterprises (MSMEs), which had been growing in the past couple of years, slowed down in the last two  quarters, according to a credit information company CIBIL report.

The report indicated that that the lending to this space increased towards lower-vintage. It said that high-risk borrowers increased the chances of a decline in asset quality.

Harshala Chandorkar, chief operating officer, TransUnion CIBIL, told CNBC-TV18 that: "Segment  which has been growing in the last couple of years has seen a slowdown in the last two quarters and this slowdown that we are seeing is across segments, whether it is the micro, the small or whether it is the medium sector borrowers."

Chandorkar said while there was slowdown, there had been a slight deterioration in the delinquencies of the MSME borrowers. "It is very minimal, about 10 basis points (bps) and the reasons that we attribute this to primarily are that the acquisitions in the micro segment,” Chandorkar added.

Krishnan Sitaraman, senior director-CRISIL Ratings, said overall credit growth across the banking system has come down to low level this year, it was about 7 percent overall credit growth and MSME segment was no exception.

"On the delinquency side, we are seeing inching up of delinquencies. As of March 2019, overall MSME delinquencies were around 10 percent of the banking system. We expect this year the NPAs to go up further maybe around 100 bps,” Sitaraman expalined.

“If I look at overall the rated universe of CRISIL, which has a large number of MSMEs, there we see a healthy balance between upgrades and downgrades. I don’t see downgrades being higher than upgrades. The reason is that the leverage levels or the debt which the MSMEs have on their balancesheets that has been steadily coming down over a period of time,” Sitaraman added.

Published On : 13-01-2020

Source : CNBC TV 18