INSUBCONTINENT EXCLUSIVE:
Mumbai: Some of the loans disbursed under the Pradhan Mantri Mudra Yojana could be turning toxic, rating agencies and bankers said, causing
concern to lenders with exposure to this borrowing segment that falls in a category qualifying for priority access to funds.
India Ratings
and Icra estimate that non-performing assets (NPAs) in this segment could be between 10 per cent and 15 per cent, much higher than 5.39 per
cent reported by the Centre in March 2018.
Mudra loans are small-ticket advances disbursed to entities or individuals under the small and
medium enterprises (SME) category.
These loans are targeted to improve the working capital access and bring the historically underbanked SME
section under the formal credit structure
These loans are unsecured, often without collateral, and lower-priced to reduce the access barrier since most applicants are first-time
borrowers and without any credit history.
Rating agencies say delinquencies in this segment are higher for public sector banks (PSBs) than
private sector lenders, given the focus on priority lending targets at the former set of financiers.
Indian lenders must compulsorily loan
40 per cent of their advances to categories designated as priority
Rs 25 crore, may let these delinquencies reflect less on loan books, but spikes will be evident once this provision ends in March 2020,
More than 70 per cent of the loans to new borrowers had been sanctioned by PSBs
because they are taken for consumption rather than production purposes
Mudra loans, worth about Rs 7 lakh crore, have been sanctioned
They account for about 10 per cent to 15 per cent of all outstanding credit at micro, small, and medium enterprises.
New Delhi aims to
achieve a disbursal target of Rs 3 lakh crore in 2018-19, compared with Rs 2.5 lakh crore sanctioned in 2017-18
According to the latest data, banks have sanctioned Rs 2.2 lakh crore worth of loans until February in FY19.
Even though these loans have
helped increase bank credit to the SME segment, analysts believe that NBFC-MFI (microfinance institutions) operating in the same industry
have been successful in educating the borrowers about credit discipline and have a better understanding of the niche markets where they
