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.