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MSME loans rise 20% in July-Sept

Loan origination volumes to micro, small and medium-sized enterprises (MSMEs) rose 20% year-on-year(y-o-y) in July-September owing to a growth in economic activity, a report from TransUnion CIBIL and Small Industries Development Bank of India showed on Wednesday.

“Availability of enriched and timely credit data and rapid implementation of digital lending infrastructure has contributed significantly towards enhancing lender confidence,” the report said.

Similarly, origination value to micro and small enterprises rose 7% and 3% y-o-y respectively. Value to medium-sized enterprises fell 9%. In terms of volume and value, originations to the manufacturing and trade sector are nearly 65%.

In the July-September period, 46% of MSME originations were from semi-urban and rural region. Similarly, the new-to-credit segment comprised 46% of originations.
Origination volumes to micro and small enterprises rose 28% y-o-y, and 7% y-o-y respectively. Volumes to medium-sized enterprises fell 8% y-o-y.

Maharashtra, Gujarat, Delhi, Tamil Nadu and Uttar Pradesh accounted for 47.2% of the origination value.

Enquiry volumes also rose 29% y-o-y in the September quarter, aided by a growth in economic activities.

While the MSME loan origination of private banks and non-banking financial companies (NBFCs) have been rising, state-owned banks have witnessed a steady decline.

Originations by NBFCs to the micro enterprise segment rose to 26% as on September 2023 from 12% in September 2020. Similarly, originations to the small enterprise segment rose to 20% as on September 2023 from 8% three years ago. Originations to the medium enterprise segment rose to 16% in September 2023 from 8% three years ago.

The low and medium risk borrower segment comprises more than 75% of MSME loan originations in September 2023. While loan originations have been robust, delinquency level has also been stable, the report showed.

During July-September, overall balance-level delinquencies measured as 90 days-past-due to 720 days-past-due and those reported as “sub-standard” have improved, and stand at 2.3%, the lowest delinquency rate in the last two years.