MSME credit demand from non-metros back to pre-Covid levels: Study

Credit and Finance for MSMEs: MSME credit demand from non-metro cities in March 2022 was back to pre-Covid levels vis-a-vis the marginal lag recorded in metro cities, according to a study launched by digital MSME lender NeoGrowth. In terms of segments, non-discretionary demand-oriented businesses such as petrol pumps, infrastructure, and auto had recovered faster than consumer-facing and discretionary demand-oriented businesses, the study noted assessing over 40,000 MSMEs from 25 cities for the period March 2020 to March 2022.

The study Rising In The Face Of Adversity also highlighted the revival of MSMEs during the post-Covid period. In the second wave, MSMEs were well prepared and could adjust to the new business environment as only 30 per cent MSMEs had required support last year in comparison to the first wave in 2020, the report said.  

“Many MSMEs were struggling in 2020-21 due to the burden of loan repayments because of the cessation of demand from consumers…The MSME ecosystem in India is a ‘Survival to Revival’ saga. The vital lessons learned from the pandemic have transformed the way businesses operated and fast-tracked their move to digital. The credit demand from MSMEs is back to a healthy level,” said Arun Nayyar, Whole Time Director & Chief Executive Officer, NeoGrowth. 

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According to the study, while MSMEs across segments were impacted due to the pandemic, it was only 46 per cent MSMEs across India that needed financial support to mitigate the impact with higher demand from non-metros than metros. Moreover, financial support availed by non-discretionary MSMEs was lesser compared to other businesses. 

MSMEs in 2020 were impacted during the lockdown due to restrictions on movement, inability to manage cash flows due to reduced consumer demand, and uncertainty around business recovery post resumptions. To support MSMEs in their recovery, NeoGrowth had launched its Sanjivni initiative to extend financial and non-financial assistance through customized solutions for all types of customers irrespective of the severity of the impact. The company said it had registered a 30 per cent growth in its customer base from 16,087 during March 2020 to 20,868 as of March 2022.

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