The average turnaround time (TAT) for a micro, small and medium enterprise (MSME) to take credit improved to 26 days in 2018 from 29 days in 2017, according to a TransUnion Cibil-SIDBI joint report.
TAT is defined as the number of days between the date of enquiry and the date of loan sanctioned or renewal date.
“Data show that from 2016 to 2018, TAT has continuously improved for MSME segment underwriting. In 2016, TAT stood at 32 days. This reduced to 29 days in 2017 and reduced further to 26 days in 2018,” said the report, MSME Pulse.
TAT is lowest for small-sized entities of up to ₹1 crore (from 23 days in 2017 to 18 days in the up to ₹10 lakh segment and from 26 days in 2017 to 24 days in the ₹10 lakh to ₹1 crore segment). The study has found that TAT has reduced significantly for micro segment over a period of time. “There is not much improvement in the TAT for larger segments, mainly as most digitisation initiatives undertaken by banks are focussed on the low-ticket segments,” said the report.
TAT has increased from 31 days in 2017 to 32 days in the ₹1 crore to ₹10 crore segment, and from 36 days in 2017 to 37 days in the ₹10 crore to ₹25 crore segment.
Non-banking finance companies have consistently demonstrated lowest TAT vis-a-vis other lender categories, and their TAT has reduced from 24 days in 2016 to 18 days in 2018. The report attributed the lower NBFC TATs to higher proportion of parameterised programme-based loans.
“While public sector banks still have the longest TAT, they have demonstrated the maximum reduction in TAT for the MSME segment from 41 days to 31 days. Private sector bank TATs have moved from 32 days to 29 days,” the report said.