NPAs in MSME segment remain stable in Q3FY18, says CIBIL, SIDBI report

Even as non-performing loans among large borrowers continue to rise, NPAs in the micro and SME segments seem to have stabilised. In the SME category (loans between Rs 10 and 250 million), NPAs remained stable at 11.2% at the end of Q3FY18, lower than the 11.3% at the end of Q3FY17. In the micro loans category (loans less than Rs 10 million), NPAs, in fact, fell from 9.2 % in Q3FY17, the period when demonetisation was announced, to 8.8 % in Q3FY18 shows a report by CIBIL and SIDBI. 

By comparison, NPAs in the large borrowers’ category (loans greater than Rs 1 billion) have soared from 14.7 % in Q3FY17 to 16.9 % in Q3FY18. 

The report titled MSME Pulse also finds that NPA rates are highest in the sub Rs 1 million category, followed by the Rs 50 to 100 million segment. 

But, NPAs in the MSME segment could take a turn for the worse. The report finds that Rs 260 billion of the banking sectors exposure to MSMEs belongs to entities who have shown irregular payment behaviour by having continuous over dues for the past 6 months. Add to this another Rs 80 billion, which is the non NPA exposure of entities whose other exposures has been tagged as NPA by at least one bank, and there is a high likelihood that some portion of this Rs 340 billion turns NPA in the near future.