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India MSME Finance Market Report 2020 Ken
research
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• The growth of MSME industry in India has led to
  an increase in demand of business loans. With an
  elevation in number of entrepreneurs in the
  country and a rise in financial literacy, a
  higher number of companies have looked forward to
  obtain finance from banks and other financial
  institutions. The increase in application and
  approval of loans has also given rise to the
  total outstanding loans. The mount of finance
  that has been outstanding from MSMEs has
  witnessed an increase from INR billion in the
  year FY2010 to INR billion in FY2015. The
  total outstanding credit, which comprised of both
  formal and informal sectors, grew steadily till
  FY2012 with an additional influx of foreign
  investments. In order to expand the foundation of
  MSMEs in India, more number of financial
  institutions provided loans to entrepreneurs
  during FY2010-FY2012.

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• However, due to the parliamentary elections in
  the year FY2014, volatility in both credit
  approval and payment was observed in the
  preceding year. With an anticipation of shift in
  political environment in the country, lenders
  were observed to practice restraint in providing
  credit to MSMEs. Also, MSMEs were observed to
  relieve themselves of outstanding loans due to
  expected increase in interest rates in the year
  FY2014. This led to a decline in outstanding
  credit in the year FY2013 and stood at INR
  billion. It represented decline from the
  previous year. But, with the consistent growth in
  the Indian economy, MSMEs borrowed more in the
  subsequent years, FY2014 ad FY2015 which
  increased the total outstanding amount to INR
  billion in FY2015.

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• MSMEs have played a crucial role in the Indian
  economy and have contributed nearly 45 in
  industrial output and 40 in exports. Apart from
  contribution to the economy, Indian MSMEs have
  also created more than million jobs as of
  FY2015. The demand for credit has risen due to
  increase in the number of MSMEs as well as the
  expansion of already established MSMEs. In order
  to maintain this momentum MSMEs have demanded
  credit facilities. The increase in credit demand
  from INR billion in FY2010 to INR billion in
  FY2015 has represent the substantial growth
  potential of the Indian MSME sector.

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• The demand for credit has been fuelled by rise in
  turnover and credit approval rate. Higher number
  of entrepreneurs have started to follow
  compliances and showcased strong credit history
  to become eligible for financing. This can be
  observed from the stable year-on-year growth from
  FY2010 to FY2015. The total demand for credit
  which stood at INR billion in FY2011 bolstered
  to INR billion in the following year. The
  succeeding years of FY2012 and FY2013 also
  witnessed annual growth rates of and
  respectively. In FY2015, the amount of credit
  outstanding from micro enterprises was observed
  to hold of total outstanding in the market.
  On the other hand, Small and medium enterprises
  held and share of the total credit
  outstanding in the market.

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• About of MSMEs were registered in the Indian
  market in FY2015. In FY2015, registered
  companies held share of withstanding credit in
  the Indian market. This represented INR billion
  worth of credit. In FY2015, manufacturing
  companies held share of withstanding credit in
  the Indian market while services companies held
  . This represented INR billion and INR
  billion worth of credit for manufacturing and
  services companies respectively. It has been
  witnessed that during FY2015, banks held the
  largest share in terms of outstanding credit to
  MSME at , NBFCs held and MFIs held share.
  It has been witnessed that during FY2015,
  Moneylender held , Chit Fund and Family and
  Friends held share in terms of outstanding
  credit to MSME.

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• Public Sector banks enjoy interest advantage over
  NBFCs and MFIs. Lending to MSMEs has been a part
  of the priority sector lending and the banks
  comply with regulatory norms of the RBI. In order
  to drive the business growth, private banks have
  shown an interest in lending to the MSME sector.
  During the period of FY2010 to FY2015, NBFCs
  have focused on MSME sector due to its high
  profitability. NBFC credit to the MSME sector has
  grown significantly during FY2010-FY2015 which
  can be seen from the growth in total amount of
  credit withstanding. NBFCs factor in the
  potential of the company besides the balance
  sheet and other financial statements to evaluate
  the credit worthiness of an enterprise.

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• In the year FY2015, Bajaj Finserv led the market
  in terms of total finance outstanding with
  share. Bajaj Finserv was followed by Religare
  Finvest, which possessed a market share of in
  the same year. Bandhan Bank was the leader of the
  industry with share of the gross loan
  portfolio (GLP). SKS Microfinance with share
  of the GLP in FY2015. In FY2014 the GoI has
  adopted a robust agenda on policy reforms, skill
  development and financial inclusion. The specific
  measures include launch of MUDRA Bank to provide
  collateral free loans backed by credit guarantee
  cover, creating an online platform for
  e-discounting of trade receivables, creating a
  Venture Capital fund-of-funds (FoFs) with SIDBI,
  creating India Aspiration Fund (IAF) and SIDBI
  Make-in-India Loan For Enterprises (SMILE) with
  SIDBI among others.

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• Along with government initiative, private sector
  financial institutions such as private banks,
  NBFCs and MFIs will look forward to provide more
  digitization of credit facilities. Future
  Projections have been reached out using scenario
  analysis. Financial technology, better known as
  Fintech, has exploded over the last 5 years.
  Globally, the investment in Online MSME finance
  market has grown by about y-o-y and more than
  USD billion was ploughed into startups in the
  online MSME finance market space in FY2015
  alone. With the influx of investment, finance and
  banking are being transformed by innovations like
  peer-to-peer models, crowd funding, and
  contactless payments. The market of financial
  technology companies is at a very nascent stage.
  There are only a handful number of players in the
  online MSME finance space who provide MSME
  credit.

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  a-msme-finance-market-report/7200-93.html
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