MSME credit market sees 29% growth in commercial loans: TransUnion CIBIL

In a significant development for India’s economy, the micro, small, and medium enterprises (MSME) credit market has experienced a notable upsurge, with a 29% growth in commercial loan demand during the July-September 2023 quarter, compared to the same period in the previous year. This growth is a clear indicator of increased economic activity across the sector, highlighting the vitality of MSMEs in driving the nation’s economic engine.

As per the latest report by TransUnion CIBIL, private banks have emerged as major players, commanding a 43% share of the MSME credit demand. However, the growth in demand from these banks was recorded at 23% during the JulySeptember 2023 quarter. Meanwhile, NBFCs, holding a 14% share of credit demand, led the growth at an impressive rate of 39% in the same period.

The supply of credit to MSMEs has also seen a healthy increase, with a 20% year-on-year volume growth in the JulySeptember 2023 quarter over the previous year. This uptick is attributed to improved lender confidence, bolstered by the availability of enriched and timely credit data, along with the rapid implementation of digital lending infrastructure.

The latest edition of MSME Pulse reveals insightful trends within the sector. There was a 7% year-on-year growth in origination value for borrowers availing loans under D1 crore, targeting the microsegment of the market. However, there was a decline in both volume and value of originations for loans seeking greater than D10 crore in the medium segment, during the quarter ending September 2023. Notably, New to Credit (NTC) borrowers maintained a majority share, accounting for 46% of MSME loan origination volumes.