CHENNAI: Rajasthan has emerged as the state with the lowest delinquency rate in India at just 2% for the period from March 2015 to March 2016, said TransUnion CIBIL on Thursday.
The commercial loan growth was highest for Kerala, Karnataka and Uttaranchal. States such as West Bengal and Jharkhand had a commercial loan growth of 1% and 4%, but their non-performing assets (NPAs) stood at the highest at 13% and 12%, respectively.
While Gujarat, Haryana and Madhya Pradesh have sub 5% NPA rate in this segment, only Gujarat is among the top five states in terms of exposure to this segment.
“While Rajasthan has lowest commercial credit NPA rate, it also has the lowest commercial credit exposure growth. Banks tend to avoid be-spoke high risk/ high NPA industries across exposure class and across regions. In both these approaches a bank is unable to optimise its lending strategy and under lends in industry-geographical clusters which show much lower default rate than the rest of the industry nationally or rest of the geography. Likewise, focusing on few states deprive lenders of the opportunity to exhibit calibrated loan growth,” said Satish Pillai, managing director and CEO, TransUnion CIBIL.
Sector-wise, the highest NPA rates of over 15% were seen in leather, textile and steel industries, making them the most risky credit borrowing industries. Industry-wise, real estate and construction businesses have observed significant loan growth at 11% and 14%, respectively, for the period from March 2015 to March 2016 with NPA rates over 6%.
TransUnion CIBIL said that micro borrower segment in India grew the highest with a compound annual growth rate (CAGR) of 15%, followed by SMEs at 10% for the eight quarters ending March 2016. CIBIL added its findings indicate a slowdown in the overall commercial sector loan growth.
The lowest growth rate of 7% CAGR has been observed in the mid-1 segment, which has exposures between Rs 25 and Rs 100 crore, for the same period. However, loan growth has been significant at 17% for the micro1 segment, which has exposure less than Rs 1 crore; and 12% for SME1 segment, which has exposure between Rs 1 crore and 25 crore.
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Between June 2014 and March 2016, mid-size and SME borrower segments saw NPAs surge by 4.4% and 3.8%, respectively. “The findings of our research indicate that the business environment is at a cusp of caution in certain sectors and promise in others. There is a tremendous responsibility for lenders to effectively assess the asset quality before disbursing loans,” said Pillai.
“Also, currently some banks tend to have analytical and strategic focus on five or at most 10 states and may not be fully sensitive on industry credit profile divergences,” he said.