19% of MSMEs eligible for govt guarantee in high-risk category: CIBIL

According to TU Cibil analysis, 28% of the MSMEs have a CMR between 1 to 3 which makes them super-prime borrowers and the least likely to default.

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According to RBI's March data, micro and small industries accounted for 4.3% of all bank loans, while the medium size category had only 1.3% of bank loans.
MUMBAI: An analysis of MSME borrowers by TransUnion Cibil shows that 19% of those eligible under the government's Emergency Credit Line Guarantee Scheme (ECLGS) fall in the sub-prime or high-risk category. On the positive side, 81% of those that will receive these loans are considered to be structurally strong.

The credit bureau has been assigning Cibil SME Rank (CMR) to small businesses based on its credit history data on a scale of 1-10. CMR 1 is the best possible rank for the least risky MSMEs and CMR 10 is the riskiest rank for MSMEs. The lower the CMR, the lesser the risk of bad loans associated with the MSME.

According to TU Cibil analysis, 28% of the MSMEs have a CMR between 1 to 3 which makes them super-prime borrowers and the least likely to default. Bulk of the small businesses fall in the 'prime' category with a CMR rank between 4 to 6. The remaining 19% are the riskiest borrowers with a CMR of over 7.


The government as part of its Atmanirbhar Bharat relief package announced a credit guarantee scheme for MSMEs that would facilitate Rs 3 lakh crore of credit infusion into the sector. The package is sizeable considering that the total amount lent out by banks to MSMEs in 2019 was only Rs 2.8 lakh crore.

"In addition to the 100% credit guarantee, the fact that over 80% eligible MSMEs have a ranking of CMR 6 or better makes ECLGS guidelines inherently cater for risk containment. However, in the rapidly changing market conditions, the dynamics of MSME businesses are evolving every day and therefore it's important to not only rely on original structural strength of MSME but to also regularly monitor borrower's behaviour," said TU Cibil MD and CEO Rajesh Kumar.

Incidentally, the percentage of sub-prime borrowers is least (18%) in the 'micro' loans category, while the 'medium' category of industries has the highest level of sub-prime borrowers at 38%, and the 'small' category has 23%.
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According to RBI's March data, micro and small industries accounted for 4.3% of all bank loans, while the medium size category had only 1.3% of bank loans. The total amount of loans outstanding to the MSME industry stood Rs 4.87 lakh crore at the end of May.
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