India’s MSME base to grow to 7.5 crore units from 6.3 crore, says a SIDBI-TransUnion CIBIL report

According to a SIDBI-TransUnion CIBIL report, the number of Ministry of Micro, Small & Medium Enterprises (MSMEs) in the country is expected to grow from 6.3 crore, of which only 2.5 crore have ever availed credit from formal sources to approximately 7.5 crore in the coming times, growing at a projected Compound Annual Growth Rate (CAGR) of 2.5%. Of the 7.5 crore MSMEs, around 5 crore are expected to be new-to-credit (NTC) entities and lenders can tap into this vast segment by identifying deserving NTC MSMEs, connecting with them and customising credit products for their requirements.

The New to Credit (NTC) MSMEs are first-time or new loan borrowers who are first-generation exporters or entrepreneurs looking for funding for business expansion or technological breakthroughs.

According to a report by the MSME Ministry, around 6.34 crore MSMEs, or more than 99% of all MSMEs, were present in the nation, of which 6.3 crore were micro firms. Small and medium units, on the other hand, only made up 0.52 and 0.01% of the total.

Commercial Loans at the entity level are classified into different segments according to the credit exposure aggregated. According to the report, micro-enterprises are those with investments of less than Rs. 1 crore (US$ 120,117). These units are further categorised into three sub-categories viz., very small with credit exposure under Rs. 10 lakh (US$ 12,011), Micro 1 where the credit exposure is between Rs. 10 lakh (US$ 12,011) to Rs. 50 lakh (US$ 60,058) and Micro 2 where the credit exposure is between Rs. 50 lakh (US$ 60,058) to Rs. 1 crore (US$ 120,117).

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.