New Delhi, Apr 12 (KNN) The share of public sector banks in lending to micro, small and medium enterprises (MSME) has been declining, whereas overall lending to the sector has expanded rapidly, according to the TransUnion CIBIL-SIDBI MSME Pulse quarterly report.

The market share of public sector banks in MSME lending (both entities and individual segment) has reduced from 58% in December 2013 to 39% in December 2018, the report said.

It also noted that aggregate lending to MSMEs has risen by a compounded annual growth rate of 19.3% over the last five years.

Of the total on-balance sheet credit exposure in India of Rs 111.1 lakh crore as of December 2018, MSME credit accounted for Rs 25.2 lakh crore.

“Going forward, we would expect that the PSBs would be able to claw back some of the share losses as more PSBs come out of the PCA framework. Their market share growth will also be aided by the continued funding constraints being experienced by the NBFC segment,” the report said.

The report, however, noted that PSBs continue to be the single biggest lender to MSMEs.

However, private sector banks now have 33% of the market share in lending to the sector in December 2018 from a mere 22% in December 2013.

The analysis also revealed that over the last five years, aggregate MSME lending as a proportion of the GDP has increased by around 400 basis points to reach 13.6% in December 2018 from 9.6% in December 2013. (KNN/JM)