MSME Financing Market in India 2020

Report Id

168813

Publisher Name

Netscribes (Research on Global Markets)

Published Date

6/1/2020

No of Pages

89

Market Scenario

Micro, small and medium enterprises (MSMEs) play a pivotal role in the Indian economy. About 63.38 Mn enterprises operational in various industries have provided employment to more than 111 Mn people. The MSME sector accounts for 30% of the country’s GDP, which is likely to touch 50% in 2025. The industry's financing needs depend on the nature, size, customer segments and stage of development of the different businesses. Financial institutions have limited their lending exposure to the Indian MSME industry due to the high cost of service, small ticket size of loans and limited ability of MSMEs to offer immovable collaterals. As of 2019, the overall addressable demand for external credit was ~INR 41.64 Tn, while the total supply of fund stood at INR 13.54 Tn. Therefore, the credit gap in the MSME industry accounted for ~INR 28.10 Tn in 2019. Debt demand of the MSME sector in India: The consolidated debt demand (both short-term and long-term finance) by Indian MSMEs accounted for ~99.39 Tn in 2019. Microenterprise debt demand accounted for INR 13.32 Tn, small enterprise accounted for INR 24.57 Tn, and medium enterprise accounted for INR 3.75 Tn of the total debt demand in the industry. Medium and small firms being more formalized in operations are better at securing collaterals with NBFCs and banks than micro-enterprises. Credit supply to the MSME sector in India: The overall credit supply, including both the formal and the informal sectors, is worth INR 86.08 Tn. The formal and the informal sectors contribute ~INR 13.54 Tn and INR 72.54 Tn, respectively to the overall credit supply. Banking and other financial institutions account for ~INR 11.68 Tn of the overall formal finance supply to the Indian MSME industry. Credit gap in the MSME sector in India: The overall credit gap is estimated to be ~INR 28.10 Tn, which can be attributed to underserved micro and small units. Further, lack of awareness among entrepreneurs about the various loan products and lack of proper documentation have considerably reduced the supply of debt. Impact of COVID-19: Small businesses are the most vulnerable to an unexpected crisis like COVID-19 because of their size, scale of business operation and limited financial management resources. However, the government has announced several policy measures to minimize the losses. The announcement of a targeted long-term repo operation (TLTRO) of INR 500 Bn, a grant of INR 3 Tn collateral-free automatic loans, INR 200 Bn subordinated debt to stressed MSMEs, and a complete ban on global tenders for procurement of goods and services for up to INR 2 Bn are a few of the crucial policy mandates. Companies covered: • Axis Bank of India • Bajaj Finserv Limited • Central Bank of India • Federal Bank Limited • HDFC Bank Limited • ICICI Limited • Kotak Mahindra Bank Limited • State Bank of India • Union Bank of India • Utkarsh Micro Finance Bank

Table of Contents

Chapter 1: Executive summary Chapter 2: Socio-economic indicators Chapter 3: Introduction 3.1. Market definition and structure Chapter 4: The MSME sector in India 4.1. Number of MSMEs in India – activity-wise split 4.2. Number of MSMEs in India – rural vs urban split 4.3. Number of MSMEs in India – activity-wise rural vs urban split 4.4. Number of MSMEs in India – based on registration 4.5. Top five industries of operation 4.6. Number of MSMEs in India – category-wise 4.7. Employment in the MSME sector in India – activity-wise 4.8. State-wise distribution of MSMEs in India Chapter 5: Debt demand of the MSME sector in India 5.1. Debt demand by the MSME sector in India (2019) (INR Tn) 5.1.1. Debt-equity split 5.2. Addressable debt demand by the MSME sector in India (2019) (INR Tn) 5.2.1. Overall debt demand exclusions 5.3. Addressable debt demand based on the size of MSME sector in India (2019) (INR Tn) 5.4. Addressable debt segment as a percentage of number of enterprises 5.5. Addressable debt demand based on type of enterprise (2019) (INR Tn) 5.5.1. Addressable debt demand of top manufacturing sectors (2019) (INR Tn) 5.5.2. Addressable debt demand of top service sectors (2019) (INR Tn) 5.6. Addressable debt demand based on geography Chapter 6: Credit supply to the MSME sector in India 6.1. Supply of debt to the MSME sector in India (2019) (INR Tn) 6.1.1. Supply of informal debt to the MSME sector in India (2019) (INR Tn) 6.1.2. Supply of formal debt to the MSME sector in India (2019) (INR Tn) 6.2. Debt supply to MSME segments in India (2019) (INR Tn) 6.2.2. Debt supply to manufacturing and service sectors (2019) (INR Tn) 6.3. Debt supply based on geography Chapter 7: Credit gap in the MSME sector In India 7.1. Overall credit gap (2019) (INR Tn) 7.2. Credit gap based on type of enterprise in India (2019) (INR Tn) 7.3. Credit gap based on type of enterprise (2019)(INR Tn) Chapter 8: Impact of COVID - 19 8.1. Impact of COVID - 19 8.2. Relief packages Chapter 9: Market trends 9.1. Market trends Chapter 10: Market influencers 10.1. Market drivers 10.2. Market challengers Chapter 11: Supportive growth environment 11.1. Supportive growth environment Chapter 12: Competitive landscape 12.1. Product benchmarking 12.2. Axis Bank Limited – Company information – Business description – Products/services – Key people – Financial snapshot – Key ratios – Key financial performance indicators – Key business segments – Key geographical segments Note: Similar information covered for all other public companies. Private companies' data given on best effort basis. 12.3. Bajaj Finserv Limited 12.4. Central Bank of India 12.5. Federal Bank Limited 12.6. HDFC Bank Limited 12.7. ICICI Limited 12.8. Kotak Mahindra Bank Limited 12.9. State Bank of India 12.10. Union Bank of India 12.11. Utkarsh Small Finance Bank Chapter 13: Potential interventions in the MSME credit ecosystem 13.1. Potential interventions in the MSME credit ecosystem Chapter 14: Recent developments 14.1. Recent developments Chapter 15: Appendix 15.1. Acronyms 15.2. Research methodology 15.3. About Netscribes 15.4. Disclaimer

Methodology

This research report involves complete picture of the market with the help of in-depth secondary and primary research. This research report studies several aspects of the market and analyze vital industry influencers. Extensive secondary research has been conducted using paid as well as open access data sources in order to gather information on the market and parent market. These key findings are then analyzed and validated with the help of in-house data models and primary discussions with key industry participants and experts across the value chain

research-methodology

Research Tools and Models

  • Top-Down Approach and Bottom-Up Approach
  • QFD Modeling for Market Size and Share Calculation
  • Regression, Variable and Impact Analysis
  • Penetration Modeling

Qualitative Research

  • It comprises briefing about market dynamics and business opportunities and strategies.
  • Finally, all the research findings are validated through interviews with in-house industry experts, freelance consultants and key opinion leaders etc.

Quantitative Research

It involves various mathematical tools, models, projection, and sampling techniques. It involves following steps:

  • Identification of market variables and market size derivation
  • Assessment of future prospects, opportunities and market penetration rates by analyzing product commercialization, regional trends etc.
  • Evaluation historical market trends and derivation of present and future year-on-year growth trends

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