2012-09-18 06:59:24 -
Analysis of MSME Loan Market for NBFCs in India - a new market research report on companiesandmarkets.com
Micro, small and medium enterprises (MSMEs) are significant growth drivers of the Indian economy. MSMEs provide employment to about xx crore persons across x.x crore units. MSMEs contribute to xx percent of the manufacturing output and to xx percent of exports*. 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.For some of the NBFCs this challenge has provided a profitable growth opportunity. Shriram City was the pioneer to enter this market in 2006, followed by Magma in 2007 and Bajaj in 2008. Cholamandalam has announced plans to enter into this segment in current financial year. NBFCs such as Shriram City and Magma Fincorp have taken the un-trodden path to profit by providing credit to MSME units that are otherwise considered non bankable.It is further more commendable these NBFCs are playing a vital role in the Government strategy for financial inclusion by focusing on the more disadvantaged community amongst MSMEs. Loans to MSMEs are not only adding to the top line of NBFCs, but are also increasing the margins due to their high yield nature.Most of the loans given to MSME sectors by NBFCs have a tenure of x-x years and it is only since 2008 the market has witnessed significant size and growth. While loans to MSMEs are considered relatively risky (mostly unsecured and to under-banked community), there is no concrete data to validate it due to the young life of this market.Report ScopeThe 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.
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