SME Loans Under Rs 10L Witnesses 32% Growth In 2017

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New Delhi: A growth of 32%  in loans to small businesses in the sub-Rs 10-lakh segment has been registered in 2017. 

The sector is getting more credit after a new law post-demonetisation barred cash transactions and introduction of GST forced businesses to formally report all sales. 

With only five million of the total 50 million small businesses in the country availing credit, this is likely to be the next big sector for lenders.

The first comprehensive report on credit to small businesses in India was released by the Small Industries Development Bank of India (SIDBI) and TransUnion Cibil. The report, which analyses repayment behaviour of all five million small businesses that have availed formal loans, shows that micro, small and medium enterprises (MSME’s) have much lower non-performing asset (NPA) rates (8-12%) than large (16%) or mid corporates (15%). Specifically, MSMEs with exposure between Rs 10 lakh-5 crore have among the lowest delinquency rates.

“This report has been created to provide data on small industries in a structured form to policymakers and lenders for intervention,” said Mohammed Mustafa, chairman, SIDBI. 

“There are many states which have a large number of MSMEs, but credit is not available to them. Policy intervention is required because there are still 45 million MSMEs without access to credit,” he added. 

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