MSME Credit Continues to Grow at a Healthy Rate Signalling Rapid Revival: Report
Total debt in India, including government debt, as well as debt of corporate entities and individual borrowers, has increased at a compounded annual growth rate (CAGR) of 13.3% to reach the level of Rs253 lakh crore during the past five years ending March 2019, says a report.
 
The sixth edition of TransUnion CIBIL- SIDBI MSME Pulse Report says the growth in aggregate debt in the past four years is powered by a 22% CAGR growth on lending to individuals, including consumer loan, business loan to individuals and other loans, 13.4% CAGR of lending to commercial entities, including MSME and corporate entities and a 10.6% of government debt.
 
 
A marked decline in non-performing assets (NPAs) adds a silver lining to these growth trends, the report says adding overall gross NPA rate in commercial lending stood at 16.0% in March 2019- a significant lowering from 17.2% during the same period last year.
 
It says, "NPA rate had reached its peak in the period between March 2018 to June 2018 for medium and large segment. However, after experiencing a long period of stress, the commercial credit sector is on the course to recovery as the NPAs have finally started showing a gradual decline post June 2018 quarter." 
 
Commenting on the report, Mohammad Mustafa, Chairman and Managing Director, SIDBI says, "The sustained growth in commercial lending along with marked lowering of NPAs is a very promising indicator of MSME sector growth which plays a pivotal role in catalysing economic development. Even more interesting is the trend on increasing rate of individual lending for businesses which brings a major shift in the composition of the lending industry in favour of individuals. These findings bode well towards the ease of doing business in India with MSMEs being able to get faster and easier access to credit for driving business growth."
 
This sixth edition of MSME Pulse covers a study on state-wise performance analysis on MSME lending under "credit opportunity" and "risk index" parameters based on a model of ranking the potential of states towards extending credit to MSME corporate entities defined basis the aggregate credit exposure up to Rs50 crore. 
 
 
The study shows that Gujarat has emerged as the top ranking state in terms of performance and growth potential for MSME lending in India followed by Andhra Pradesh, Haryana, Karnataka and Delhi. Other states with high potential in MSME corporate lending are Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh and Jammu & Kashmir. 
 
 
Commenting on this finding on state wise performance, Satish Pillai, MD and chief executive (CEO) of TransUnion CIBIL says, "The state-wise performance insights throw significant light on the credit opportunity, potential of MSME growth and risk predictors across India. Gujarat has consistently ranked no. 1 over the last four years (FY16 to FY19).
 
While Maharashtra ranks highest on market size, its NPAs are also high indicating increase in credit risk. Close monitoring of MSME portfolios and timely risk identification and control measures are crucial towards achieving healthy MSME growth and sustained economic development."
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    COMMENTS

    V ganesan

    5 months ago

    This is good in economic slowdown .Are people ignore these indicators in stock market. or are they threteaning the govt by way bringing down the shareprices regarding super rich tax.Currency is stable bond yields are at low global markets at multiyear high.there is no reason for our market to fall except the high valuation.

    So What Did Consumers Go Crazy About on Amazon Prime Day?
    Nothing probably signals the huge popularity of Maggi noodles - once banned by Indian government- than the numbers it notched up on Amazon’s prime day sales. According to a Nestle communication to stock exchanges, a limited edition assorted box became the best seller in the grocery and gourmet section within four hours. This also signals a change in purchasing patterns, where online platforms, which are able to create special packages and deliver them nationwide may be able to sweep sales if the product catches the buyers’ fancy. 
     
    Nestle says Maggi Fusian, its range of Asian flavour inspired noodles, have garnered overwhelming consumer response on Amazon Prime Days, witnessing an equivalent of 2.5 lakh single units being sold over a two day period, with orders coming from 29 states of India. 
     
    "This is the highest ever sale over a two day period of any Maggi noodle variant unit on an e-commerce platform and surpasses what we had achieved while relaunching the brand in 2015," says Nikhil Chand, director for foods and confectionery at Nestle India.
     
    According to the company, its limited edition assortment box, created for the platform, became the bestseller in the 'grocery and gourmet foods' section within four hours of the launch and continued to be the most sold item during the entire duration of sales on this section. The box was also the most 'wished for' product in the same section, when the 'Prime Day' sales closed, it added.
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    IL&FS Fallout? After ICRA, CARE Rating Sends Its MD & CEO Rajesh Mokashi on Leave
    CARE Ratings has sent its managing director & chief executive (CEO) Rajesh Mokashi on leave with immediate effect, until further notice. CARE is the second ratings agency to send its top executive on leave after ICRA, post an anonymous complaint forwarded by Securities and Exchange Board of India (SEBI) to the agencies for probe.
     
    "The board of directors of CARE Ratings has at its meeting decided, pending the completion of the examination of anonymous complaint received by SEBI to place Rajesh Mokashi, MD & CEO of CARE, on leave, with immediate effect, until further notice," the statement from the ratings agency says. 
     
    Mr Mokashi has been associated with CARE Ratings since 1993 and, in August 2009, was appointed on the company board.
     
    CARE Ratings has appointed TN Arun Kumar, its executive director for ratings, as interim CEO and will not be part of ratings operations to ensure independence of ratings, it added.
     
    Earlier this month, ratings agency ICRA sent its MD & CEO Naresh Takkar on leave following concerns raised in an anonymous representation shared by the market regulator.
     
    Almost all rating agencies had given high ratings to Infrastructure Leasing & Financial Services (IL&FS) when the ground reality of the company was different. The rating agencies have been accused of not reporting the deteriorating financials of IL&FS. This prompted SEBI in December last year to initiate adjudication against credit rating agencies.
     
    As per the interim report of the serious fraud investigation office (SFIO), the modus operandi of IL&FS group from 2015 to 2018, was to keep the holding company and its immediate subsidiaries financially viable and healthy, through an unsustainable, pyramidal funding, routing short-term funds borrowed at the holding company or the subsidiary company level to its various step-down or project subsidiaries, as the holding companies' contribution or to avoid default on these companies' borrowing.
     
    The report says, "Defaults in the group companies were avoided for the period by routing funds borrowed by key companies, which projected a financially healthy picture, thus creating an unsustainable bubble in the absence of sufficient revenue generation internally by the IL&FS group."
     
    According to SFIO, this was done to project key subsidiaries of IL&FS as financially sound through the interest charges, dividend and fee-based returns as well as through ever-greening of loan. This allowed IL&FS and its key subsidiaries to enjoy regular dividends, interest payments and high credit ratings.
     
    During September 2018, rating agencies ICRA, CARE and India Ratings downgraded the bonds, long-term loans and short-term commercial papers of IL&FS and its subsidiaries. It is interesting to note that IL&FS did not seek ratings from CRISIL.
     
    The credit ratings of IL&FS’ bond papers went down by nine notches to ‘BB’ grade, which is considered non-investment grade, from ‘AA+’ which indicates a strong financial profile.
     
    The ratings of commercial papers, which are debt papers that mature within a year, went down by six notches to A4 from A1+, another instance of sharp change in the financial profile from strong to very weak.
     
    Several mutual fund (MF) schemes hold the debt papers of IL&FS, and its subsidiaries, in large numbers. The total amount of currently outstanding debt papers held by MF schemes was valued at around Rs2,400 crore as at end-August, before the downgrade.
     
    Separately, CARE Ratings says it has appointed Najib Shah, former chairman of Central Board of Excise and Customs (CBEC), as additional independent director on its board.
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    COMMENTS

    Prakash Bhate

    4 months ago

    Financial rating companies and auditing firms indulging in this kind of nefarious activities are financial terrorists who have done more harm to the country than that done by Masood Azhar, Dawood Ibrahim, Hafeez Saeed, etc. They should have been chased, hounded, caught and punished. Sending their head honchos on leave is like asking Masood why a good boy like him is doing what he is doing and telling him that he should not do such things in future.

    Madhu K R V

    5 months ago

    Financial rating companies and the Auditing firms lost credibility. There should be serious introspection needed for better India. Book the culprits as per the law; no mercy allowed on these idiots :(

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