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Analysis of MSME Loan Market for NBFCs in India
Frost & Sullivan, Dec 2011, Pages: 47
The research service introduces the relevance of MSME Loans Market for NBFCs in India. Frost & Sullivan believes that with the emergence of newer business models to tap bottom of pyramid, NBFCs loan disbursals to MSMEs has grown at a rapid rate from FY 2009 to FY 2011. Further, drivers, restraints, and challenges are analyzed. Following that, estimates of current and forecasted market size and market share analysis is provided. Company profiles of the top NBFC companies and End user analysis is studied. The conclusions represents the SWOT analysis of the NBFC market and recommended strategies to ensure a profitable future.
DEFINITIONS
- The market for this research service is defined as “loans given to micro, small and medium enterprises (MSME) sector by non-banking financial companies (NBFCs) in India. Such loans are mostly unsecured or partly secured.
- Top 20 NBFCs have been considered in this research.
- Market size is the value of loan disbursements by NBFCs in a financial year. Financial year is April 1 to March 31 of the following year.
- All values are represented in Indian Rupees (Rs) as lakhs and crores.
IMPORTANCE OF MSMEs
- Micro, small and medium enterprises (MSMEs) are significant growth drivers of the Indian economy.
- Despite this obvious importance of MSMEs to the Indian economy, government departments, SIDBI and the RBI have not been able to reach out to the majority of MSMEs. It is estimated that only about x percent of unregistered and 10 percent of registered MSMEs have access to finance from banks and financial institutions (organized sector).
- One of the biggest challenges faced by the MSMEs in India is the inadequate and delayed access to quality credit.
- Traditionally, primary lenders to MSME segments have been local moneylenders in the unorganized sector. Credit from unorganised sector is not only unreliable but also intermittent and expensive. MSME segment thus provides significant untapped market potential for NBFCs.
- NBFC market has been consolidating with the number of deposit taking NBFCs declining every consecutive year since 2005-2006.
- However, the quality of each surviving NBFC has been improving as indicated by increasing average asset size and growth in income.
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