Motilal Oswal On Financial Sector - Asset Quality Remains Under Watch, MSME Credit Declines

According to TransUnion CIBIL, NPA ratio in the MSME segment has risen by 140 basis points over the year ago to 12.8% in Q1 FY21.

A shopkeeper counts cash in a shop in India. (Photographer: Anindito Mukherjee/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Motilal Oswal Report

As per the latest TransUnion CIBIL Ltd. on Micro Small and Medium Enterprise Pulse report, asset quality continued to deteriorate in the MSME segment, with the non-performing asset ratio increasing by 140 basis point YoY to 12.8% as of Q1 FY21.

However, non-banking financial companies have witnessed the most significant increase in NPAs in the segment by approximately 390 basis point YoY to 9.7%.

Currently, approximately 80%/86% of the public sector bank/private bank MSME disbursements in June 2020 were toward the super prime and prime category MSME borrowers.

However, incrementally higher inquiries were seen from high-risk category borrowers.

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Motilal Oswal Financial Sector Update.pdf
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