Macro Economy

MSMEs register growth due to offtake of government schemes: TransUnion CIBIL

Our Bureau Mumbai | Updated on March 05, 2021

MSME ‘Growth Index climbed to 114 in Sept 2020 from 111 in June

The overall micro, small and medium enterprise (MSME) ‘Growth Index’, measured by the increase in exposure value over time, has picked up from 111 in June 2020 to 114 in September 2020, possibly owing to significant uptake of Government schemes, said TransUnion CIBIL.

“There has been a boost in growth possibly owing to ECLGS (collateral-free Emergency Credit Line Guarantee Scheme announced by the Government in May 2020 to help small businesses tide over the Covid-19 pandemic crisis) offtake in the last two quarters,” the credit information company (CIC) said in a report.

The CIC observed that the spike in the overall MSME ‘Strength Index’, measured by decreasing risk in terms of Non-Performing Assets (NPA), from 83 in June 2020 to 89 in September 2020 is partly due to the increased base effect.

Furthermore, actual NPA rates observed are subject to change as regulatory /legal guidelines emerge, going forward.

For the purpose of creating the indices, the CIC said the median of total debt for all MSME segments are within the range defined based on aggregate credit exposure/total borrowing — Micro (exposure up to ₹1 crore); Small (exposure between ₹1 crore and ₹10 crore); and Medium (exposure between ₹10 crore and ₹50 crore).

March 2018 has been taken as a fixed benchmark for computing the index and sub-index. Metric values are scaled using a base of 100.

Index by MSME size


CIBIL notices an uptick in ‘Growth Index by MSME size’ across all MSME segments in the past two quarters, possibly due to ECLGS.

Strength Index by MSME size reveals that the index values across all segments reached the same level as in June 2020, while following a different trajectory in the last two years. The index increase in September 2020 may not be reflective of an actual reduction of NPAs, the CIC said.

Index by lender category

At a lender category level, the CIC observes that private sector banks (PvBs) and public sector banks (PSBs) have seen a boost in growth in the last two quarters, possibly owing to ECLGS. The same looks comparatively muted for non-banking financial companies (NBFCs).

Absolute credit disbursements data show that PSBs have emerged as the leading MSME lender group for the period June 2020 to September 2020. Disbursals by private banks were also impacted during the lockdown; however, they are back to pre-Covid-19 levels.

Index by State

Among states with substantial MSME portfolio by exposure, Tamil Nadu (TN), Maharashtra and Gujarat have shown higher growth momentum in both the growth and strength indices.

For TN, the growth and strength indices improved to 120 (from 116 in June 2020) and 76 (from 72 in June 2020).

For Maharashtra, the growth and strength indices improved to 109 (from 108 in June 2020) and 82 (from 79 in June 2020).

For Gujarat, the growth and strength indices improved to 117 (from 115 in June 2020) and 89 (from 84 in June 2020).

Published on March 05, 2021

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