Pri­vate banks’ & NBFCs’ share con­tin­ues to in­crease

Banking Frontiers - - Research Notes - Credit -

The re­port says the ma­jor chunk of growth in MSME lend­ing in 3QFY2019 has come from pri­vate banks and NBFCs with their mar­ket shares in­creas­ing by 400 bps and 300 bps re­spec­tively. Pub­lic sec­tor banks con­tinue to be the ma­jor

provider of credit to MSMEs (40% share), but this has con­sis­tently re­duced in the last 5 years (from 58% in 3QFY14). How­ever, go­ing for­ward, says the re­port, this trend is ex­pected to moderate as more pub­lic sec­tor banks come out of the PCA frame­work and the im­pact of liq­uid­ity is­sues shows up in the num­bers for NBFCs.

The re­port also says pub­lic sec­tor banks dom­i­nated the <`1 mil­lion NTC seg­ment in MSME lend­ing and pri­vate banks are gain­ing share in the `1 mil­lion - 100 mil­lion NTC seg­ment in MSME lend­ing. An anal­y­sis of NTC bor­row­ers in the MSME seg­ment of <`100 mil­lion ticket size shows ro­bust growth of 20% yoy to `0.5 mil­lion in 2HFY2018 from `0.4 mil­lion in 2HFY2017. This has been driven by faster growth in the `10-100 mil­lion seg­ment (24% yoy in 2HFY2018) with pri­vate banks gain­ing mar­ket share at the ex­pense of pub­lic sec­tor banks. Pri­vate banks have been less ag­gres­sive in the <`1 mil­lion seg­ment where pub­lic sec­tor banks still con­tinue to be ma­jor play­ers with steady 78% share in NTC ad­di­tions. Credit to gross value added (GVA) ra­tio in the MSME seg­ment in­creased 1500 bps in the last 5 years.

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