There has been a revival in bank credit to small businesses driven by public sector banks on the back of the government’s emergency credit line guarantee scheme (ECLGS).
According to TransUnion Cibil’s report, credit to small businesses grew twice as fast as advances to large borrowers. “The on-balance sheet commercial lending exposure in India stood at Rs 71.3 lakh crore in September 2020 with year-on-year growth of 2.1.

MSME segment’s credit exposure is Rs 19 lakh crore, showing year on year growth of 5.7% and this credit growth is observed across all the sub-segments of MSME lending,” the report said.

The highest year-on-year growth of 9% was seen in the category of small businesses with a loan exposure of between Rs 10 lakh to Rs 50 lakh. This was followed by the Rs 50 lakh to Rs 1 crore segment which saw a growth of 8%.

According to Trans Union Cibil, the stimulus package announced by the government through ECLGS has helped credit demand and supply bounce back to pre-Covid levels. It added that commercial credit enquiries in January 2021 have settled at pre-Covid levels.

“The resurgence in MSME credit growth, which is back at pre-pandemic levels, is a very promising indicator of economic recovery in our markets. …Budget announcement by the FM have doubled the contribution to the MSME sector over last year, which shall further provide much needed financial support to the sector,” said Rajesh Kumar, MD & CEO, Trans Union Cibil.

The study on small businesses is published jointly by Trans Union Cibil and Small Industries Development Bank of India (Sidbi). The report also include a Cibil MSME Rank (CMR) indicating creditworthiness.

The study on CMR downgrades across sectors reveals that rank deterioration is relatively lower for MSMEs that are focused on consumer staples or necessity sectors like auto, infrastructure and FMCG and higher for MSMEs where consumer discretionary spends are highest — sectors like hospitality, commercial real estate and textiles.
Trans Union Cibil is committed to work with all the ecosystem players including the government, the regulator, lenders and last-mile MSMEs to support sustainable growth of the sector”.