MSME loans worth Rs 2.32 lakh crore are at higher risk of becoming NPAs

New Delhi, Apr 27 (KNN) Micro Small and Medium Enterprises (MSMEs) loans worth Rs 2.32 lakh crore are at a higher risk of becoming Non-Performing Assets (NPA) as they fall in the highest risk category of 7 to 10, according to credit information firm TransUnion Cibil.

Out of Rs 2.32 lakh crore loans at risk, micro-enterprises having loans of less than Rs 10 lakh, in the highest risk category of Cibil MSME Rank (CMR)-7 to CMR-10, totals up to Rs 13,600 crore.

To predict the probability of MSME becoming NPA in the next 12 months, CMR uses machine learning algorithms and provides rank to MSME based on its credit history data on a scale of 1 to 10.

CMR-1 is considered as the best possible rank for the least risky MSMEs while CMR-10 is considered as the riskiest rank for MSMEs.

“The ongoing COVID-19 pandemic poses new challenges to businesses, especially for micro-enterprises, who are often more vulnerable to sudden changes in the economic environment,” said Rajesh Kumar, MD and CEO, TransUnion Cibil in a statement.

As per the Transunion Cibil, lending to MSMEs, having aggregate credit exposure of up to Rs 50 crores, was around Rs 17.94 lakh crores.

''This represented approximately 28 per cent of commercial credit outstanding while the overall on-balance sheet credit exposure was Rs 64.04 lakh crores in India. The micro-segment comprises 55 lakh businesses had Rs 93 thousand crores in loan balances,'' it said.