msme credit health index - transunion cibil
TRANSCRIPT
MSME CREDIT HEALTH INDEXSECOND EDITION | FEBRUARY 2021
CONTENTS
Quotes 02
Background 03
Methodology 04
Key Assumptions 05
Index Results 06
- Overall Index 06
- Index by MSME Size 07
- Index by Lender Category 08
- Index by State 10
FAQs 11
Annexure 13
Contact 15
TransUnion CIBIL is committed in providing insights and solutions
to support the economic revival of the country and with the launch
of the MSME Credit Health Index we further reassert our
commitment by introducing a reliable, objective and sharp indicator
of the strength, growth and stability of the MSME sector. The Index
is available at national level and granularly across MSME segments,
lender categories and geographies. The objective of the Index is to
support MSMEs, lenders and policy makers with an efficient tool to
monitor and benchmark the movement in the micro-ecosystems of
the MSME sector. The ongoing monitoring of the index will provide
insights for aligning strategies and policies towards efficient
implementation of funds and resources for sustained development
of the MSME sector and thereby the socio-economic growth.
02MSME Credit Health Index
MD and CEO ofTransUnion CIBIL
Shri Rajesh Kumar
03MSME Credit Health Index
TransUnion CIBIL has partnered with Ministry of Statistics & Programme Implementation (MoSPI) to build and publish quarterly MSME Credit Health Index to help measure growth and strength of the MSME sector.
Currently, various Government schemes exist to boost growth in the MSME sector. A recent example is the collateral free Emergency Credit Line Guarantee Scheme (ECLGS) announced in May 2020 to help small businesses tide over the COVID-19 pandemic crisis. However, there is a scope of further enhancing the information and insights available to policy makers, lenders and other stakeholders with regard to the overall progress of the sector and the areas where they need to focus their attention on. The MSME Credit Health Index is an attempt to provide data driven insights on MSMEs.
The MSME Credit Health Index is built using credit data as submitted by Credit Lending Institutions (CLIs) to TransUnion CIBIL. The Index looks at two critical aspects of the credit health of the MSME industry – Growth and Strength. Growth is measured by increase in exposure value over time, and strength is measured by decreasing risk in terms of Non-Performing Assets (NPA). March 2018 has been taken as a fixed benchmark to compute the Index values.
The MSME Credit Health Index will provide the Government, policy makers, lenders and other stakeholders, insights and analysis on various aspects of health of the MSME industry, thus enabling them to make better policy and business decisions with respect to MSME lending. The ease of access of such comprehensive information with a single MSME Credit Health Index will facilitate better risk management and inclusion of MSMEs in Indian banking and financial system. The Index will also help to educate general public about the credit health of MSME sector and thereby instill confidence.
BACKGROUND
MSME CreditHealth Index -
Growth
MSME CreditHealth Index -
Strength
Total Exposure NPA %
MSME Size
Lender Category
State
04
• Two separate indices are computed measuring Growth and Strength for MSME sector.
• Entire MSME industry data starting March 2018 to September 2020 has been considered for Scomputation of the index.
• Growth is measured by total exposure (outstanding balances) and Strength is measured by NPA % i.e. balances in 90 or more days past due.
• Both the growth and strength index follow the principle of higher the better – an increasing Growth Index indicates improvement in credit growth; and an increasing Strength Index implies better asset quality.
• March 2018 has been taken as a fixed benchmark for computing the index and sub-index.
• Metric values are scaled using a base of 100.
• The index values will be available at an overall MSME level, by size of MSMEs, by lender category and by State.
• Sub-indices are calibrated separately with their own benchmarks. Eg: for Micro Segment Index, the base will be all Micro MSMEs and will allow comparison across time and geography
• The index will be refreshed every quarter.
Additionally, the following considerations will be explored further and may be incorporated in future versions of the Index:
• Incorporating multiple metrics into each index to capture different aspects of Growth and Strength respectively
• Seasonality adjustments
• Different industries’ aspects within MSMEs
MSME Credit Health Index MSME Credit Health Index
METHODOLOGY
Data Source: Latest data submitted by CLIs to TransUnion CIBIL.
MSME Definition: As per the MSMED Act, MSMEs are defined basis investment in plant and machinery or equipment (INV) and annual turnover (TO) as follows:
The above definition has been translated into a definition involving credit exposure as per the following analysis:
To compare the correlation between the turnover and debt of any entity, sample of entities were selected from CMIE-Prowess IQ database. Data on total turnover and total borrowings for the period of December 2018 was gathered for this sample of entities. Total borrowings included borrowing from banks, financial institutions, and other borrowings - secured and unsecured borrowing.
It was observed that from the sample of 2,296 borrowers falling in the turnover bucket u p to INR 250 crores, 96% of entities also fell under MSME segment with aggregate exposure up to INR 50 crores. Study also suggests that Median of total borrowings across Micro, Small and Medium segment is INR 24 lakhs, INR 3.96 crores and INR 19.03 crores respectively. Hence, it seen that the median of total debt for all the MSME entity segments are within the range of MEMEs defined based on aggregate credit exposure/total borrowing as given below:
Micro: Exposure up to INR 1 Crore
Small: Exposure between INR 1 Crore and INR 10 Crores
Medium: Exposure between INR 10 Crores and INR 50 Crores
Given the constraints around availability of turnover data in the bureau and based on the findings mentioned above, it was reasonably concluded that exposure may be effectively used to classify MSME borrowers. Accordingly, the above definition of MSME in terms of credit exposure has been used for the development of this Index.
05
Micro INV <= INR 1 crore; TO <= INR 5 crores
Small INV <= INR 10 crores; TO <= INR 50 crores
Medium INV <= INR 50 crores; TO <= INR 250 crores
MSME Credit Health Index
KEY ASSUMPTIONS
06MSME Credit Health Index
Overall IndexMSME credit growth (YoY increase in credit exposure) has picked up since June 2020, possibly owing to significant uptake of Government schemes, such as ECLGS, aimed at helping the sector bounce back from the impact of the global pandemic and ensuing lockdown.
As noted above, there has been a boost in growth possibly owing to ECLGS offtake in the last two quarters. The spike in Strength Index is partly due to the increased base effect. Furthermore, actual NPA rates observed are subject to change as regulatory /legal guidelines emerge going forward.
120
110
100
90
80
Inde
x V
alue
Base
100 100
104107
111109 110 111
108111
114
Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20
Growth Index
110
100
90
80
Inde
x V
alue
Base
100
92 92 91
97
89
86 86
90
83
89
Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19
Strength Index
INDEX RESULTS
Dec-19 Mar-20 Jun-20 Sep-20
07MSME Credit Health Index
Index by MSME Size
Similar to the overall index, we notice an uptick in growth across all MSME segments in the past two quarters, possibly due to ECLGS.
A look at Strength Index by MSME size reveals that the Index values across all segments have reached the same level in June 2020, while following a different trajectory in the last two years. Similar to what we observed in the overall graph, the index increase in September 2020 may not be reflective of an actual reduction of NPAs. This true direction of the index will become clearer over the next few months as regulatory/legal guidelines emerge.
130
120
110
100
90
80
Inde
x V
alue
Base Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20
Growth Index by MSME Size
Micro
Small
Medium
110
100
90
80
Inde
x V
alue
Base Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20
Strength Index by MSME Size
Micro
Small
Medium
08MSME Credit Health Index
Index by Lender Category
At a lender category level, we observe that Private Banks (PVTs) and Public Sector Banks (PSBs) Sector banks have seen a boost in growth in the last two quarters, possibly owing to ECLGS. The same looks comparatively muted for Non-Banking Financial Companies (NBFCs).
Absolute credit disbursements datashow that PSBs have emerged as the leading MSME lender group for the period Jun’20 to Sep’20. Disbursals by Private Banks were also impacted during the lockdown however they are back to Pre-Covid levels.
140
130
120
110
100
90Base Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20
Growth Index by Lender Category
PSB
PVT
NBFC
Inde
x V
alue
900800700600500400300200100
0
# L
oans
(’0
00
)
Jun
-19
Sep
-19
Dec
-19
Mar
-20
Jun
-20
Sep
-20
Loans Sanctioned Volume by Lender Type
NBFC
PVT
PSB
09MSME Credit Health Index
120
110
100
90
80
70
60
50
40
Strength Index by Lender Category
PSB
PVT
NBFC
Inde
x V
alue
As seen in the overall strength index, there is a slight increase in the strength index across all lender categories, which is due to base effect and may not be reflective of actual improvement in portfolio.
As far as absolute values are concerned, PSBs continue to have much higher NPAs as compared to Private Banks and NBFCs.
250%
200%
150%
100%
50%
0%
-50%
-100%
-150%
YoY Growth Rate of Originations of MSME loans by amount for lendergroups
PSB
PVT
NBFCJan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20
Base Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20
Base Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Mar-20 Jun-20 Sep-20Dec-19
% B
alan
ces
in N
PA
20%
15%
10%
5%
0%
NPA Rate by Lender Category
PSB
PVT
NBFC
10MSME Credit Health Index
Base 100 100 100 100 100 100
Jun-18 101 90 100 90 102 96
Sep-18 107 83 104 90 108 95
Dec-18 111 82 106 90 110 94
Mar-19 116 86 109 96 114 96
Jun-19 114 80 107 89 114 90
Sep-19 115 77 107 84 113 85
Dec-19 115 76 109 82 116 87
Mar-20 110 96 103 82 111 88
Jun-20 116 72 108 79 115 84
Sep-20 120 76 109 82 117 89
Period Tamil Nadu
Growth Strength Growth Strength Growth Strength
Maharashtra Gujarat
Index by State
Among states with substantial MSME portfolio by exposure, it is observed that Tamil Nadu, Maharashtra and Gujarat have shown higher growth momentum. The state of Gujarat also reflects relatively better strength. Details on Indices at State level are given in Annexure.
Other notable mentions:
•Uttar Pradesh, which is in the top 10 states by exposure, has seen sustained growth momentum in the last couple of quarters
•Among the top 10 states with respect to exposure, the southern states have shown more growth than the northern states cumulatively with respect to Micro loans
•West Bengal and Telengana, also in the top 10, have stable Strength Indices along with steadily increasing Growth Indices
11MSME Credit Health Index
DOES THE INDEX INCLUDE ALL MSMES IN INDIA? The MSME Credit Health Index has been built using credit data as submitted by lending institutions to TransUnion CIBIL. Hence, it includes MSMEs who have availed of formal credit. As of September 2020, it includes data of close to 60 lakh MSMEs which have a live credit facility from any lending institution in India.
ARE ALL INDUSTRIES REPRESENTED IN THE INDEX? The data considered for this index captures the universe of MSMEs who have availed formal credit from any lending institution. Therefore, the Index has a good representation across all industries. However, no analysis or sampling has been done to align the representation of any particular industry in credit data to that of overall MSME industry.
HOW WAS THE BENCHMARK SELECTED?March 2018 is selected as base to reflect a period that is “Normal” and as a data point that is closer to the beginning of the series.
CAN STATE LEVEL SUB-INDICES BE COMPARED TO EACH OTHER?Each sub-index, e.g. for each state and for each size of MSME have their own benchmarks. Hence, they cannot be compared against each other. E.g. Uttar Pradesh Growth Index may not be directly comparable to Gujarat Growth Index. However, the growth momentum or change in strength as compared to the benchmark may be comparable.
HOW WILL THIS INDEX BE RELEVANT IN THE CURRENT SCENARIO?MSME credit had been going through a tough time even pre-COVID, but various government schemes like ECLGS have set the stage to boost MSME sector. The MSME Credit Health Index will be one such tool which will enable policy makers and market participants to better understand the growth and strength of the sector from a lending perspective and hence equip them to make better decisions.
WHAT ARE THE ENHANCEMENTS EXPECTED IN THIS INDEX IN THE FUTURE?Going forward, there will be further studies done to make the Index more robust and to build more sub-indices across other dimensions like Industry of the MSME as an example..
(1)
(2)
(3)
(4)
(5)
(6)
FAQS
MSME Credit Health Index
AT WHAT FREQUENCY WILL THERE BE A REVISION IN THE INDEX?The Index will be revised at a quarterly interval. Along with publishing the Index for the latest quarter, revision will be done for the last version of the Index (previous quarter) as well, in case there is updated information pertaining to the said quarter available in the bureau.
DOES THE INDEX CONSIDER ONLY NEW CREDIT OFFTAKE OR TOTAL EXPOSURE?The current version of the Index uses total exposure or outstanding balance of MSMEs at the point in time. New credit offtake was not included given the current reporting format followed by lending institutions
DO THE SEPTEMBER 2020 INDEX VALUES FACTOR FOR MORATORIUM AVAILED BY MSMES?TransUnion CIBIL DOES NOT get information on moratorium availed by borrowers from CLIs. The index values for September 2020 are derived basis outstanding balances and performance history as reported by CLIs.
(5)
(6)
(7)
12
13MSME Credit Health Index
Jun-20
100 103 106 113 119 126 126 127 124 136 145
100 102 151 149 172 143 154 180 150 170 187
100 102 104 110 117 116 115 115 115 116 121
100 89 91 94 101 92 86 84 79 73 80
100 101 104 106 111 104 106 110 100 106 108
100 94 97 96 89 85 93 94 125 126 124
100 99 102 103 107 106 107 107 103 111 117
100 93 92 95 103 101 97 94 115 105 115
100 101 106 110 115 113 114 118 119 122 130
100 95 96 94 114 98 97 106 107 110 123
100 98 100 102 105 103 102 101 98 102 106
100 93 96 94 94 87 92 89 95 99 102
100 99 103 111 117 113 112 118 120 119 123
100 91 83 84 92 81 73 75 75 71 75
100 100 106 106 107 104 105 102 100 104 102
100 97 96 90 104 102 104 87 75 95 94
100 98 104 106 112 113 112 116 106 116 112
100 96 100 88 97 90 78 83 78 93 88
100 99 103 104 107 104 106 107 103 103 106
100 94 96 97 98 90 88 88 84 83 86
100 100 101 102 103 100 100 98 90 94 96
100 90 102 100 117 109 112 112 106 102 109
100 102 108 110 114 114 113 116 111 115 117
100 96 95 94 96 90 85 87 88 84 89
100 100 104 106 110 107 109 110 108 111 117
100 96 100 99 108 96 91 95 91 84 86
100 102 105 105 105 105 107 104 104 107 112
100 97 97 82 92 93 94 99 93 105 118
100 103 109 112 116 121 122 121 121 126 134
100 101 104 103 99 104 74 63 61 67 73
100 99 105 106 110 107 108 110 110 114 120
100 94 98 98 114 107 105 114 113 111 125
100 101 103 107 111 110 109 110 106 111 114
100 90 88 85 90 82 79 79 76 71 79
Andaman & Nicobar Islands
Andhra Pradesh
Arunachal Pradesh
Assam
Bihar
Chandigarh
Chattisgarh
Dadra & Nagar Haveli
Daman & Diu
Delhi
Goa
Gujarat
Haryana
Himachal Pradesh
Jammu & Kashmir
Jharkhand
Karnataka
State Base Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Mar-20
Jun-20
Sep-20
Index for every State
ANNEXUREGrowth Index Strength Index
14MSME Credit Health Index
100 102 106 109 114 111 113 112 109 116 122
100 89 83 85 92 82 80 79 78 74 80
100 95 118 164 162 150 170 121 92 143 157
100 21 118 55 162 100 113 243 184 165 178
100 100 102 107 112 110 109 113 112 115 120
100 89 87 84 90 80 76 78 77 74 80
100 100 104 106 109 107 107 109 103 108 109
100 90 90 90 96 89 84 82 82 79 82
100 100 104 103 114 115 114 116 105 124 130
100 89 84 96 100 87 87 96 102 130 83
100 102 103 101 107 104 102 102 87 98 102
100 98 103 102 104 93 96 97 145 160 161
100 107 114 102 105 105 102 99 91 105 113
100 101 75 94 108 106 105 103 121 102 110
100 100 99 101 107 105 108 107 105 108 110
100 95 92 92 95 87 89 83 90 86 91
100 100 103 106 112 111 111 114 115 116 123
100 95 98 99 109 103 102 106 105 103 112
100 99 101 104 112 109 111 111 107 111 113
100 90 90 97 99 93 92 88 101 89 103
100 99 103 102 105 102 104 103 101 103 109
100 94 95 94 97 90 88 87 86 93 101
100 101 105 107 112 111 112 114 112 115 121
100 91 90 77 89 76 73 72 69 64 67
100 102 115 113 119 117 112 103 99 93 99
100 104 76 74 85 86 85 73 75 62 65
100 101 107 111 116 114 115 115 110 116 120
100 90 83 82 86 80 77 76 96 72 76
100 103 105 108 112 111 110 114 110 114 118
100 96 96 95 105 97 97 99 97 93 101
100 100 103 103 106 103 107 105 105 104 111
100 93 93 90 96 81 86 86 92 89 102
100 101 105 108 113 112 112 113 112 114 120
100 94 97 90 100 90 88 91 88 86 95
100 105 110 113 114 114 116 118 116 117 123
100 99 100 83 98 98 98 101 90 88 102
100 99 104 104 108 106 107 108 106 107 111
100 94 97 97 102 95 92 92 101 95 102
Kerala
Lakshadweep
Madhya Pradesh
Maharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Odisha
Pondicherry
Punjab
Rajasthan
Sikkim
Tamil Nadu
Telangana
Tripura
Uttar Pradesh
Uttarakhand
West Bengal
State Base Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Mar-20
Jun-20
Sep-20
CONTACT DETAILS
TransUnion CIBIL Contacts
Abhay Kelkar – Vice President, Research & Consulting
Smeeta Basak – Joint Vice President, Head of Data Science and Analytics
Vipul Mahajan - Joint Vice President & Market Planner for Commercial Bureau Business
MoSPI Contacts
Dilip Kumar Sinha - Deputy Director General,
National Accounts Division,
National Statistical Office,
Ministry of Statistics and Programme Implementation,
15MSME Credit Health Index
16
About TransUnion CIBIL
India’s pioneer information and insights company, TransUnion CIBIL makes trust possible in the modern
economy. We do this by providing a comprehensive picture of each person so they can be reliably and safely
represented in the marketplace. As a result, businesses and consumers can transact with confidence and
achieve great things. We call this Information for Good.® TransUnion CIBIL provides solutions that help
create economic opportunity, great experiences and personal empowerment for millions of people in India.
We serve the financial sector as well as MSMEs, corporate and individual consumers. Our customers in India
include banks, financial institutions, NBFCs, housing finance companies, microfinance companies and
insurance firms.
For more information visit: www.transunioncibil.com
Disclaimer
The MSME Credit Health Index Report is prepared TransUnion CIBIL Limited (TU CIBIL). By accessing and
using the Report the user acknowledges and accepts such use is subject to this disclaimer. This Report is
based on collation of information, substantially, provided by credit institutions who are members with TU
CIBIL. While TU CIBIL takes reasonable care in preparing the Report, TU CIBIL shall not be responsible for
errors and/or omissions caused by inaccurate or inadequate information submitted to it by credit institutions.
Further, TU CIBIL does not guarantee the adequacy or completeness of the information in the Report and/or
its suitability for any specific purpose nor is TU CIBIL responsible for any access or reliance on the Report and
that TU CIBIL expressly disclaims all such liability. This Report is not a recommendation for rejection / denial
or acceptance of any application nor any recommendation by TU CIBIL to (i) lend or not to lend; (ii) enter into
or not to enter into any financial transaction with the concerned individual/entity. The Information contained
in the Report does not constitute advice and the user should carry out all the necessary analysis that is
prudent in its opinion before making any decisions based on the Information contained in this Report. The use
of the Report is governed by the provisions of the Credit Information Companies (Regulation) Act, 2005, the
Credit Information Companies Regulations, 2006, Credit Information Companies Rules, 2006. No part of the
Report should be copied, circulated, published without prior approvals.
© 2021 TransUnion CIBIL Limited All Rights Reserved TransUnion CIBIL Limited 19th Floor, Tower 2, One World Centre,Senapati Bapat Marg,Elphinstone Road, Maharashtra 400013.
MSME Credit Health Index