Delinquency in MSME loans: MSME borrowers have shown improved delinquency rates in the fourth quarter of the financial year 2022-23. According to the SIDBI-TransUnion CIBIL August 2023 report on MSME credit performance for Q4 FY23, the MSME delinquency rates were 2.4 per cent for 90-720 days past due (DPD) and sub-standard assets — lowest in the last two years. Substandard assets are typically NPA assets for a duration less than or equal to 12 months.
The portfolio performance showed a decline in delinquency across all borrower segments. Among micro borrowers, the delinquency rate stood at 3.1 per cent during Q4 FY23 from 3.9 in Q4 FY22 while among small borrowers, the delinquency rate improved to 2 per cent from 2.4 per cent during the period. Likewise, among medium borrowers, the rate improved to 1.9 per cent from 2.3 per cent.
Also read: ECLGS: 5.4% of MSME loans turn NPA; govt says it is reasonable
Moreover, delinquency rates declined across all three lender categories. Non banking financial companies (NBFCs) showcased the most significant decline in delinquency rate at 3.6 per cent in FY23-Q4, down from 5.0 per cent in FY 22-Q4 while private banks reported a decline in delinquency rate from 1.6 per cent in Q4 FY22 to 1.4 per cent in Q4 FY23. For public banks, the delinquency rate dropped from 3.7 per cent to 3 per cent in Q4 FY23.
Also read: MSME NPAs drop to 12.5% while disbursements jump 24%: SIDBI-TransUnion Cibil report
Meanwhile, the credit demand in the MSME sector during Q4 FY23 grew by 33 per cent year on year, double from Q4 FY20, indicating a substantial and noteworthy increase in borrowing activity, the report noted. However, “credit flow to the MSME sector was slower compared to the increasing demand as lenders followed a cautious approach on commercial lending,” it said. The credit supply in contrast to credit demand grew at only 11 per cent in FY 23-Q4.
In FY23-Q4, the total credit disbursed was Rs 2.41 lakh crore in comparison to Rs 2.45 lakh crore in Q4 FY22, Rs 1.83 lakh crore in Q4 FY21 and Rs 1.42 lakh crore in Q4 FY20.
