MOSL: FINANCIALS – NBFC-MSME Finance sector in a sweet spot-Fastest growing segment within non-retail finance
Financials - NBFC: MSME Finance sector in a sweet spot; Fastest growing segment within non-retail finance; NBFCs gaining share
We studied the ‘MSME Pulse’ report authored by SIDBI and Trans Union-CIBIL. Our key takeaways:
Growth in micro-credit higher than other segments
Over the past two years (CY15-17), micro-credit (
Asset quality stable in MSME finance; mid-large corporate most impacted
Interestingly, not only is the GNPL ratio lowest in the micro-credit segment, but also the increase in the GNPL ratio over CY15-17 is the lowest. For the micro and SME credit segment, GNPL ratio increased by 80/140bp over the past two years. For the mid and large corporate segment, it increased by 280/900bp. The latter was driven by RBI’s asset quality review (AQR) in 4QFY16. Also, for the MSME finance segment as a whole, the GNPL ratio for private banks has remained stable at 3.7%, while that of state-owned banks and NBFCs has increased by 200bp. Also, among all states, Rajasthan stands out in terms of asset quality (GNPL ratio of 3.5% v/s average of ~10%).
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