Some food for thought
"Writing is like prostitution. First you do it for love,
and then for a few close friends, and then for money."
—Moliere (French Playwright, 1622-1673)
Word for the day
Akimbo (adj)
With hand on hip and elbow bent outward, e.g., to stand with
arms akimbo.
(of limbs) splayed out in an awkward or ungainly manner, e.g., After
the strenuous hike, she sat on the floor with her legs akimbo.
First thought this morning
Indubitably, the Swachata Abhiyan (Cleanliness Mission) started
by the incumbent NDA government has yielded some encouraging results.
From my anecdotal experience I know that the official data on
the Swachata Abhiyan (Cleanliness Mission) may not be accurate. The official
data on the number of household toilets newly constructed and villages actually
made open defecation free might be exaggerated, or manipulated and/or simply
based on misinformation provided by the local authorities.
Many independent media reports and reports from government
agencies like CAG have highlighted the gaps between the conditions on the
ground and the official claims.
Recently, some regional media report suggested that the government
claims on the PM's pet Ujjawala scheme may also be misleading to a little
extent.
In the given state of our polity, one can hardly find fault with
the incumbent government and its supporting media boasting success of all
schemes and programs, and opposition parties and their supporting media out
rightly rejecting all these claims.
The problem for voters is how to make an assessment of the
government's performance, especially when the credibility of the official
watchdogs like CAG and CVC has been tarnished by the politicians themselves,
and many of the NGOs have been found to be indulging in unethical practices.
Chart of the day
MSME loans to individuals is best credit
In reference to
my post yesterday (see here)
some readers have raised further queries. I would like to draw the following
data points from the cited CIBIL report, which should answer most of the
queries raised by the readers.
(a) For the classification
purpose, loans less than Rs1cr are classified as Micro lending; and loans
between Rs1cr and Rs25cr are classified as Small. Loans in the range of Rs25cr
and Rs100cr are considered medium and loans above Rs100cr are considered large.
(b) Out of the total
business credit of ~Rs105.5trillion, Micro and Small credit (MSME) is about 23%
or Rs24.7trillion. However, excluding agri and retail segment, credit to MSME
is about 35.6% of the overall business exposure.
(c) During 2017-18,
the average credit cost (percentage of NPAs) for MSME credit has been 1.8%.
However, the latest NPA rates are between 1-1.5%. The industry average of net
interest margin (NIMs) on credit to this sector range from 4-7%, giving a
healthy rate of return between 2 to 5%.
(d) The share of
NBFCs in new credit sanctions to the MSME segment has increased from 13% in
(Sep’15) to 17% in (Sep’18). Number of NBFCs having over Rs100 Crores MSME
portfolio has increased in the same period from 51 to 77 (out of total 128).
(e) Sectors, which
are the most dependent on NBFC funding, include Transport & Logistics
(which have 35% dependency on NBFC finance), Real Estate, Education,
Healthcare, Mining & Construction.
(f) NPA rates in
MSME credit has reduced from 8.7% (for Micro) and 11.4% (for SME) in September
2017 to 8.5% and 11.3% respectively in September 2018.
(g) The fastest
growing sub-segment within MSME is the loans to individuals, followed by micro
loans between Rs1-5mn to commercial entities. MSME loans to individuals
recorded lowest percentage of NPAs (~2%); whereas the account with Rs10-25cr
credit recorded the highest percentage of NPAs (~14%).
(h) For private banks
the credit cost for MSME credit has been negative for past 12months, whereas for
PSBs it has risen to 1highest in three year to 1.5%. NBFCs have also seen rise
in NPAs from MSME segment in past 12months.
(i) The MSME credit
market share is showing material shift from PSBs to private banks and NBFCs.
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