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  1. PSBs losing MSME market pie to private banks, NBFCs

PSBs losing MSME market pie to private banks, NBFCs

Public sector banks (PSBs) continue to lose MSME market share to private banks and NBFCs.

By: | Mumbai | Published: September 20, 2018 2:58 AM
PSBs have lost around 9% market share in the micro, small & medium enterprises (MSME) segment in just two years to March 2018.

Public sector banks (PSBs) continue to lose MSME market share to private banks and NBFCs.

PSBs have lost around 9% market share in the micro, small & medium enterprises (MSME) segment in just two years to March 2018. Private banks (with 30% market share) and NBFCs (with 11% market share) have benefited almost equally by this decline, observed analysts at Kotak Institutional Equities.
New-to-credit (NTC) borrowers have seen a steady increase over the last two years — the rate of NTC additions from the first half of FY17 to the first half of FY18 increased to 12% from 7% in the below Rs 10-lakh segment. The increase in Rs 10-lakh to Rs 10-cr loan segment has been relatively muted at 5% from 4% in the same period.

Although PSU banks have lost ground in the consolidated numbers, they still have a dominant 75% market share in NTC loans in below Rs 10-lakh segment in the first half of FY18. Experts noted that outreach of PSU banks is higher than private banks, which explains comparatively higher lending in the low-ticket size segment. However, NBFCs are rapidly increasing competition in such geographies, private banks and NBFCs have 49% market share of customers in the Rs 5-Rs 10cr segment.

The recently released TransUnion CIBIL data also shows that NBFCs have the fastest turn-around-time (TAT) of 18 days for a successful loan transaction. Whereas, TAT for private banks and public banks is 29 days and 31 days respectively. From a ticket size perspective, TAT slows down with an increase in ticket size, loans less than Rs 10 lakh bucket are being processed in 18 days while Rs 10-25-cr ticket size is processed in 37 days as per the latest report.

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