Findings from the latest edition of the TransUnion CIBIL-SIDBI MSME Pulse Report indicate that credit disbursement to the MSME sector has doubled compared to pre-pandemic levels across segments, indicating that lenders are in a position to support increasing credit demand. Overall, MSME credit exposure stood at ₹23.12 lakh crores as of March ’22, reflecting a year-on-year (YoY) growth rate of 6.3%. The total number of live MSME borrowers increased by 6% YoY in March 2022.

Credit demand and supply continued to remain buoyant

Report analysis shows that MSME credit demand has been progressively increasing after the second wave of the pandemic, with current demand clocking ≈1.6X that of the pre-COVID phase. Commercial credit inquiries have picked up in the last year owing to the recovery in economic and business activity. Public Sector Banks (PSBs) have seen a 1.6X inquiry growth while Private Banks (PVTs) witnessed 1.7X growth as compared to that of the pre-COVID phase. Non-Banking Financial Companies (NBFCs) showed recovery trends following the second pandemic wave in the first quarter of FY22. NBFCs showed a 1.4X growth in inquiries as compared to that of the pre-COVID phase.

Sivasubramanian RamanSpeaking on the findings of this edition of MSME Pulse, Mr. Sivasubramanian Ramann, Chairman  and Managing Director, SIDBI, said: “Insights on credit demand and supply from this edition of MSME Pulse verify that timely liquidity infusion through the ECLGS has strengthened the MSME sector towards resurgence. Lenders have successfully executed the ECLGS and provided timely support to all the MSME segments. With this infusion, MSMEs can scale business growth rapidly.”

Adding to this, the Managing Director & CEO of TransUnion CIBIL, Mr. Rajesh Kumar, said: “The increase in MSME credit demand across segments bodes well for economic resurgence. By catering to this demand astutely, lenders can grow their portfolios while contributing to financial inclusion as well as GDP growth. The resurgence can be strengthened further by facilitating speedier and more seamless triangulation of multiple sources of information for creating an orthogonal view of MSMEs. Fortified information infrastructure that provides an enriched view of MSMEs can build the bedrock required for scaling sustainable and long-term evolution of India’s MSME sector.”

The rise in demand has been well supported by lenders with total MSME credit disbursement clocking 43% YoY growth in FY22-Q4. Compared to the pre-COVID phase (FY20-Q4), disbursement across all three MSME segments have almost doubled in FY22-Q4. Disbursements in the micro, small and medium segment increased YoY by 19%, 33% and 38%, respectively from FY21 to FY22.

Source: TransUnion CIBIL