MSMEs register growth due to government schemes: TransUnion CIBIL

The Government’s scheme on ECLGS enabled MSMEs to register growth as per a TransUnion CIBIL report.

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TransUnion CIBIL, India’s largest credit bureau said, “The overall micro, small and medium enterprise (MSME) ‘Growth Index’, measured by the increase in exposure value over time, has picked up from 111 in June 2020 to 114 in September 2020, possibly owing to significant uptake of Government schemes.”

It added in the report, “There has been a boost in growth possibly owing to ECLGS (collateral-free Emergency Credit Line Guarantee Scheme announced by the Government in May 2020 to help small businesses tide over the Covid-19 pandemic crisis) offtake in the last two quarters.”

The credit score company also observed that the spike in the overall MSME strength index which is measured by decreasing risk in terms of non-performing assets from 83 in June 2020 to 89 in September 2020 is partly due to the increased base effect.

It also said the actual NPA rates observed are subject to regulatory and legal guidelines as they change.

TransUnion CIBIL said the median of total debt for all MSME segments are within the range of defined aggregate credit exposure/total borrowing and March 2018 has been taken as a fixed benchmark for computing the index and sub-index and metic values are scaled using a base of 100.

The credit scoring company noticed an uptick in the growth index by size of MSMEs and the reason could possibly be due to ECLGS. ECLGS was a collateral-free Emergency Credit Line Guarantee Scheme announced by government.

The index by size also reveals all segments reached same levels in June 2020 and followed a different trajectory in the last two years and may not be reflective of an actual reduction of NPAs.

On a lending level, TransUnion CIBIL observes that private sector banks and public sector banks have seen a boost in growth in the last two quarters which is possibly owing to ECLGS and the same looks comparatively muted for non-banking financial companies.

PSBs have emerged as the leading MSME lender till September 2020.

On the basis of state, Tamil Nadu, Maharashtra and Gujarat have shown higher growth momentum in both growth and strength indices.