SIDBI-CIBIL Report says credit disbursal to MSMEs rose by Rs 2.7 lakh cr in FY21

The latest edition of the SIDBI-TransUnion CIBIL MSME Pulse Report indicates that in loans worth ₹9.5 lakh crores were disbursed to MSMEs in 2020-21, much higher than Rs 6.8 lakh crore in 2019-2020. According to the CIBIL report, the jump in credit disbursal to MSMEs is largely on the back of government interventions like Emergency Credit Line Guarantee Scheme (ECLGS) under the Atmanirbhar Bharat program.

The total on-balance sheet commercial lending exposure in India stood at ₹74.36 lakh crores in March 2021, with year-on-year growth rate of 0.6%. MSME segment’s credit exposure stood at ₹20.21 lakh crores as of March 2021, showing y-o-y growth rate of 6.6%. This credit growth is observed across all the sub segments of MSME lending, says the SIDBI – CIBIL report.

Credit demand sees a sharp surge

CIBIL Report analysis shows a significant surge in credit demand post unlocks after the first and the second wave of the pandemic. Followed by the initial drop in commercial credit enquires by 76% during the first wave, credit demand recovered rapidly backed by ECLGS intervention and have since has sustained close to pre-COVID-19 levels. At the end of March 2021 commercial credit enquiries were at 32% over pre-COVID-19 levels; this strong momentum was impacted by the 2nd wave, but June 2021 again showed a sharp recovery to pre-COVID-19 levels.

Managing Director and CEO of TransUnion CIBIL Rajesh Kumar said: “The government’s pro-growth initiatives like extending ECLGS support to the tune of Rs 4.5 lakh crores, regulatory reforms like restructuring of loans and the swift implementation of these initiatives by banks & credit institutions using data analytics has fortified MSMEs.  With these progressive policies and support, India’s MSME sector is set on a definite resurgence trajectory and this bodes well for the future strength and growth of our economy.”

Of the MSME that were given loans in the period of January to March 2021, 29% had missed more than one payment in last three months. Of the MSMEs that were given loans during January to March 2020, 21% had missed more than one payment in the preceding three months.

“The MSME credit data speaks volumes of success of ECLGS scheme. The scheme has played a major role in 40% Y-o-Y growth in disbursements to the sector, thereby reviving the business sentiments among the MSMEs. The key highlight which signals the revival is credit to new-to-bank (NTB) which has returned back to pre-COVID levels, while credit to existing-to-bank (ETB) remains buoyant. The recent additional relief measures by Government, especially in healthcare, travel and tourism, are expected to improve credit offtake in the MSME sector. Going forward, the lenders need to continuously monitor the health of credit portfolios, while sustaining credit growth to MSMEs”, said Mr. Sivasubramanian Ramann, Chairman and Managing Director, SIDBI.

Also read: Banks can restructure loans of covid-hit MSMEs without asset downgrade