New Delhi, Feb 19 (KNN) Under the aegis of the Government’s Emergency Credit Line Guarantee Scheme (ECLGS), commercial credit enquiries surged 58 per cent year-on-year (YoY) in June’20 and stabilised towards the end of the year, up around 13 per cent (YoY) as of December’20, which is similar to pre-COVID-19 growth levels.

According to Transunion Cibil report, the total on-balance-sheet commercial lending exposure in India stood at Rs 71.25 lakh crores on September 20, clocking a growth rate of 2.1 per cent YoY. For the MSME segment, credit exposure stood at Rs 19.09 lakh crores as of September’20, showing YoY growth of 5.7 per cent. This credit growth is observed across all the sub-segments of MSME lending.

MSME loan originations show a shaped recovery with the Existing to Bank (ETB) segment being the primary beneficiary

Report analysis further indicates that MSME loan originations growth during January 20 and February 20 was over 30 per cent YoY. However, this growth rate reduced significantly in March 20 and April 20 consequent to the COVID-19 lockdowns. With the launch of the ECLGS, loan originations surged in June 20, growing at 115 per cent over June 19 and continued to be high and close to pre-covid-19 levels for the remainder of the year.

''This strong rebound in MSME loan originations was driven by the ETB segment. Borrowers who have an existing commercial credit relationship with the lender are defined as ETB,'' the report said.

This is primarily due to the design of the ECLGS, where the guidelines mandate lenders to extend 20 per cent of the credit to existing borrowers. Consequently, the YoY growth in ETB loan originations crossed 200 per cent in the first month of the ECLGS infusion. Since then, this spike has tapered off, but ETB originations continue to stay buoyant. On the other hand, new-to-bank (NTB) originations are finding it hard to recover to pre-COVID-19 levels, the Cibil said.

Speaking on the findings of the MSME Pulse, the MD & CEO of TransUnion CIBIL, Rajesh Kumar, said, “The resurgence in MSME credit growth, which is back at pre-pandemic levels, is a very promising indicator of economic recovery in our markets. Public Sector Banks (PSB) are the leading drivers of this resurgence as they have astutely wielded data analytics and credit information solutions to swiftly comply with the ECLGS guidelines and dexterously implement lending to MSMEs.''

''The recent budget announcement by the finance minister has doubled the contribution to the MSME sector over last year, which shall further provide much needed financial support to the sector. TransUnion CIBIL is committed to work with all the ecosystem players including the government, the regulator, lenders and last-mile MSMEs to support the sustainable growth of the sector,” he added.

Commenting on the findings of the report, V Satya Venkata Rao, Deputy Managing Director, SIDBI said, “Credit growth to MSME sector has witnessed sharp rebound and registered 5.7 per cent YoY growth in September 20, on account of large policy stimulus by Government including ECLGS. Public sector banks have been the front runners in supporting the MSMEs during the pandemic and as the economic activity has rebounded, Private Banks and NBFCs are also witnessing a spurt in credit demand. As we move ahead on the path of growth, we need to carefully monitor the risk build-up signs, especially in the Micro segment which is witnessing comparatively higher CMR downgrades.”