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MSME credit to grow at 12-14% over next 5 yrs: Icra

MSME credit to grow at 12-14% over next 5 yrs: Icra

Mumbai, Mar 19 (PTI) The credit to micro, small and medium enterprises (MSMEs) is expected to grow at 12-14 per cent over the next five years, helped by higher lending by non banking finance companies (NBFC) to the segment, says a report.

As on March 2017, credit to MSMEs stood at Rs 16 trillion.

NBFC and housing finance companies are expected to expand at about 20-21 per cent compounded annual growth rate (CAGR) in this space during the period, while bank credit to this segment, which accounted for about 84 per cent of total MSME credit, is estimated to grow at a lower CAGR of 9-11 per cent, according to a report by Icra.

"Non-banks? share in the MSME credit pie should expand to 22-23 per cent by March 2022 compared to 16 per cent in March 2017. Non-banks, with their niche positioning, differentiated product offering, good market knowledge and large unmet demand, would be able grow at a healthy rate vis--vis banks," the rating agencys assistant vice president and sector head, A M Karthik said.

He added there is large unmet credit demand in the MSME segment, which was estimate to be about Rs 25 trillion in FY2017.

"While non-bank asset quality is expected to worsen from current levels, the extent of deterioration may be lower than that witnessed in banks," the report said. PTI HV DSK DSK