1 min read.Updated: 28 Jul 2021, 12:12 PM ISTLivemint
Government interventions like Emergency Credit Line Guarantee Scheme (ECLGS) was a major factor in driving this significant surge in credit disbursement to MSMEs
MUMBAI: Lenders have disbursed loans worth ₹9.5 trillion to micro, small and medium enterprises (MSMEs) in FY21, 40% higher than ₹6.8 trillion in the previous year, showed findings from the latest edition of the Sidbi - TransUnion Cibil MSME Pulse Report.
The report said that government interventions like Emergency Credit Line Guarantee Scheme (ECLGS) was a major factor in driving this significant surge in credit disbursement to MSMEs.
The total on-balance sheet commercial lending exposure in India stood at ₹74.36 trillion in March, with a year-on-year growth rate of 0.6%. Credit exposure to MSMEs stood at ₹20.21 trillion as of March, a y-o-y growth of 6.6%, the report said.
It also pointed out a significant surge in credit demand post unlocking of the economy after the first and second waves of the pandemic. Followed by the initial drop in commercial credit enquiries by 76% during the first wave, they recovered rapidly backed by ECLGS intervention and have sustained close to pre-covid-19 levels, it said.
Sivasubramanian Ramann, chairman and managing director of Sidbi said that the MSME credit data speaks volumes of the success of ECLGS scheme, and it 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 (customers) which has returned back to pre-covid levels, while credit to existing-to-bank (customers) remains buoyant. The recent additional relief measures by the government, especially in healthcare, travel and tourism, are expected to improve credit offtake in the MSME sector," said Ramann.
According to the report, after the first wave of covid-19, there was a reduction in new originations on high-risk MSME entities in CMR 8–10 categories and the reduction is offset by an increase in originations in CMR 6–7 categories, implying lenders have a reduced risk appetite in the current uncertain environment.
Cibil Rank (CMR) assigns a rank to the MSME based on its credit history data on a scale of 1-10, CMR 1 being the best possible rank and CMR 10 being the riskiest rank.