COVID-19 impact: MSME credit declines by 6% in Q1, reports Motilal Oswal
Asset quality continued to deteriorate in the MSME segment with the non-performing asset (NPA) ratio increasing by 140 basis points year-on-year to 12.8 per cent.
Parul October 29, 2020
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Total credit to micro, small and medium enterprises (MSMEs) in the country declined 6 per cent year-on-year in the first quarter of current fiscal year and 3.4 per cent quarter-on-quarter, reported Motilal Oswal Financial Services.
MSME credit witnessed the sharpest decline in the metro and urban locations versus rural and semi-urban regions. Among states, Maharashtra reported the sharpest decline followed by Gujarat while Chhattisgarh and Bihar witnessed moderately improving trends.
Asset quality continued to deteriorate in the MSME segment with the non-performing asset (NPA) ratio increasing by 140 basis points year-on-year to 12.8 per cent as of 1Q FY21, said Motilal Oswal in the report.
The NBFCs witnessed the most significant increase in NPAs in the segment by 390 basis points to 9.7 per cent, it added.
Over the last few months (from March to June), the missed payments rate (at least on term loans) increased from 9 per cent (pre-COVID levels) to 25 per cent in the super prime category. On the other hand, a sharp increase was seen in subprime category borrowers from 11 per cent (pre-COVID) to 36 per cent.
Also, private banks rebounded to earlier disbursal levels of February. The total loans sanctioned under emergency credit line guarantee scheme (ECLGS) stand at Rs 1.9 lakh crore, of which Rs 1.4 lakh crore has already been disbursed.
Among the lenders, public sector banks disbursed Rs 68,800 crore, private banks Rs 59,700 crore and NBFCs just Rs 2,200 crore.