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The market shares of private banks and non-banking financial companies continue to improve, more so with SME borrowers with better rates. The report adds that low credit penetration, economy moving towards formalisation, banks and NBFCs gradually shifting the focus towards this segment provide a thrust to the business.
All stakeholders expect the MSME sector to grow rapidly, because the impact of GST and demonetisation is subsiding. Another stimulant that is driving banks towards lending to retail and MSMEs is the muted corporate loan growth.
The report found that macroeconomic events such as demonetisation and higher geographic concentration could affect SME/MSME sector. The risk profiles of units located in the western and northern areas of NCR, MMR and Ahmedabad are better, while those of units in the southern regions such as Bengaluru, Chennai and Hyderabad are weak.
While the MSME segment is showing a positive trend, the public sector banks are gradually losing ground to the private banks and non-banking financial companies. In the period July 2017 to December 2017, PSU banks had more of the market share (~75%) in new-to-credit (NTC) for loans
below INR 1 million. However, in the INR 50-100 million segment, private banks and NBFCs have ~49% share of customers.[/vc_column_text][/vc_column][/vc_row]