‘ECLGS, unlocks help MSME credit offtake rise 6.6% in FY21’

Unlocks within the month of June have led to a pointy bounce again in credit score demand by MSMEs, which was dampened by the second wave after a robust fourth quarter of FY21.
Strong rebound in credit score demand, accompanied by equally robust credit score provide and Emergency Credit Line Guarantee Scheme (ECLGS) assist, has led to development within the credit score excellent quantity of MSME sector to Rs 20.21 lakh crore, with a year-on-year development price of 6.6 per cent, says a report from TransUnion Cibil and SIDBI.
“In FY2021, the country disbursed loans worth Rs 9.5 lakh crore to MSME sector, higher than preceding year of Rs 6.8 lakh crore in FY 2020,” Cibil mentioned. The complete on-balance sheet industrial lending publicity in India stood at Rs 74.36 lakh crore in March 2021, with a year-on-year development price of 0.6 per cent.
After the preliminary drop in industrial credit score enquiries by 76 per cent because of the first wave, they recovered quick with ECLGS and have since sustained near pre-Covid ranges. Commercial credit score enquiries in March 2021 had been 32 per cent over pre-Covid ranges, Cibil mentioned. “MSME credit outstanding has grown by 6.6 per cent YoY in March’21, with micro segment growing the fastest at 7.4 per cent.”
Micro phase was adopted by the small phase at 6.8 per cent and medium phase at 5.8 per cent. Lending to new-to-bank (NTB) MSMEs has recovered again to pre-Covid ranges, whereas lending to existing-to-bank (ETB) continues to be bouyant. Credit disbursals to NTB MSMEs had dropped by 90 per cent in April 2020 in comparison with pre-Covid ranges, and has regularly returned again to five per cent larger than pre-Covid ranges in March 2021, Cibil mentioned.
Rajesh Kumar, Managing Director & CEO of TransUnion CIBIL, “the significant surge in MSME credit demand post gradual reopening of the markets, reasserts India’s growth story. 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 insurance policies and assist, India’s MSME sector is ready on a particular resurgence trajectory and this bodes properly for the long run energy and development of our financial system, Kumar mentioned.

“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,” mentioned Sivasubramanian Ramann, Chairman and Managing Director, SIDBI.
Of the MSME that got loans within the interval of January to March 2021, 29 per cent had missed a couple of cost in final three months.