TransUnion CIBIL and Small Industries Development Bank of India have released the sixth edition of the MSME Pulse Report, highlighting continued growth in India’s commercial lending sector and improving asset quality.
The report noted that total debt in India grew at a CAGR of 13.3% between March 2015 and March 2019 to reach ₹253 trillion. Growth was primarily driven by a 22% CAGR in lending to individuals, followed by 13.4% CAGR growth in lending to commercial entities and 10.6% growth in government debt. The report observed that the rapid rise in individual lending has significantly altered the composition of India’s lending industry in favour of individual borrowers.
The report also highlighted improvement in asset quality, with the overall gross NPA rate in commercial lending declining to 16.0% in March 2019 from 17.2% a year earlier. NPAs in medium and large segments had peaked between March and June 2018, but the sector has since shown signs of gradual recovery.
Commenting on the findings, Mohammad Mustafa said the sustained growth in commercial lending and reduction in NPAs indicate positive momentum for the MSME sector, which plays a crucial role in economic development. He added that the increasing trend of individual lending for businesses reflects improved ease of access to credit for MSMEs.
The report also included a state-wise performance analysis of MSME lending based on “Credit Opportunity” and “Risk Index” parameters. The ranking model evaluated states on factors such as total credit exposure, number of accounts, customer base, market growth, delinquency levels and risk profile.
According to the study, Gujarat emerged as the top-performing state for MSME lending growth potential, followed by Andhra Pradesh, Haryana, Karnataka and Delhi. Other states identified as having strong MSME lending potential included Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh and Jammu and Kashmir.
Satish Pillai said the state-wise insights provide a clearer understanding of MSME credit opportunities and associated risks across India. He noted that while Maharashtra ranks highest in market size, the state also records higher NPAs, indicating elevated credit risk and the need for close portfolio monitoring.
Small Industries Development Bank of India is the principal financial institution for the promotion, financing and development of the MSME sector in India and supports enterprises through a combination of financial and developmental initiatives.
