Micro, Small and Medium Enterprises (MSMEs) credit quality is expected to remain stable in the coming months despite recent geopolitical disruptions, according to Sachin Seth, Chairman of CRIF High Mark and Regional MD, CRIF India and South Asia.He said the impact on loan repayments has so far been limited, and there are no signs of a broad-based increase in bad loans for banks and non-banking financial companies (NBFCs).
Seth said lenders remain willing to extend credit, while government support schemes and easing geopolitical tensions could help MSMEs recover. He added that sector-specific challenges may persist, but the overall credit environment remains stable.
Speaking about CRIF High Mark’s latest report covering March and April, Seth said credit growth has slowed slightly, but early delinquency levels have changed only marginally.”There is not much of an impact, very minute impacts,” he said. While loan disbursals moderated as lenders adopted a cautious approach, delinquency trends remained largely unchanged across micro, small and medium enterprises.
Data from the report showed that the 31-90-day portfolio at risk increased to 1.8% in April from 1.6% in March, while loans overdue by more than 90 days rose to 7.8% from 7.6%. Seth attributed the increase mainly to seasonal factors rather than geopolitical tensions.”I would not take too much impact of the geopolitical issues,” he said, adding that the changes reflected seasonal and quarterly dynamics and would need to persist for another two months before indicating a meaningful trend.According to Seth, some industries, including food processing, automobiles, garments, logistics and trading, have faced pressure from higher fuel prices, gas availability and supply chain disruptions. However, he said government support measures, including export credit guarantee schemes, have helped lenders continue extending working capital to affected businesses.Seth also said discussions with banks, NBFCs and fintech companies suggest there is no intention to slow MSME lending. Instead, lenders are taking a more selective approach by focusing on stronger borrowers while monitoring supply chains and input costs.He explained that micro enterprises continue to dominate the MSME credit market. Around 83% of active MSME loans are to borrowers with exposure below ₹2 crore, reflecting the structure of India’s MSME ecosystem.Despite concerns around tariffs, supply chains and geopolitical developments, Seth said these factors alone are unlikely to trigger a significant deterioration in asset quality during the June quarter, adding that the economy, lenders and businesses are adapting to the changing environment while preparing to benefit from improving conditions.For the full interview, watch the accompanying videoCatch all the latest updates from the stock market here
Source link
