MUMBAI: The momentum of growth has been the highest for the Micro segment in the last two years compared to small sized and medium sized firms according to a new index – MSME credit health index – launched by the ministry of statistics and programme implementation in partnership with credit bureau Transunion Cibil.
Among states, Tamil Nadu , Uttar Pradesh and Rajasthan have showed higher growth among states with substantial MSME lending
With the index valued at over 110, the growth momentum has been the highest for the micro segment, followed by small enterprises with an index less than 110 in value and medium enterprises with the index less than 100 in value.
“Most of the digital lending innovation has taken place in the micro loan segment. Lenders have adopted an analytic driven underwriting approach supported by alternate data in this segment that has propelled its growth” the report by the credit bureau said. “On the other hand, Medium enterprises continue to be evaluated in a more traditional way. Further, the concentration risk being higher in Medium segment because of loan size being large, this segment has become less attractive for lenders in general”.
Among states with substantial MSME portfolio (more than 4% share in total MSME exposure), it is observed that Tamil Nadu, Uttar Pradesh and Rajasthan have shown higher growth momentum.
The MSME Credit Health Index is built using credit data submitted by lending institutions to TransUnion CIBIL. The index measures the credit health of India’s MSME industry on two parameters: Growth and Strength.
Growth is measured by plotting increase in exposure value (outstanding balances) over time and strength is measured by decrease/ increase in credit risk in terms of non-performing assets (NPA). Both the growth and strength indices follow the principle of higher the better. The first version of the MSME Credit Health Index is based on data from March 2018 to June 2020.