MSME Credit Health Index: LAUNCHED! Check how this will benefit government, policy makers, lenders and market participants

In order to provide a reliable measure and benchmark of the growth and strength of the MSME sector in India, TransUnion CIBIL in partnership with Ministry of Statistics & Programme Implementation (MoSPI) has launched MSME Credit Health Index.

MSME Credit Health Index

-The MSME Credit Health Index will provide government, policy makers, lenders and MSME market participants, a unique and reliable numeric indicator for measuring and benchmarking the health of the MSME sector.

-This measurement model, based on comprehensive data and intensive analytics is set to facilitate better MSME credit risk management, formulation of strategies and policies to support the revival and resurgence of the MSME sector and the economy.

-The MSME Credit Health Index is built using credit data submitted by lending institutions to TransUnion CIBIL. The index measures the credit health of India’s MSME industry on two parameters: Growth and Strength.

-Growth is measured by plotting increase in exposure value (outstanding balances) over time and strength is measured by decrease/ increase in credit risk in terms of non-performing assets (NPA).

-Both the growth and strength indices follow the principle of higher the better – i.e. an increasing Growth Index indicates improvement in credit growth; and an increasing Strength Index implies better asset quality and therefore denotes an improvement in the structural strength of the sector.

Speaking at the launch of this index, Dr. Kshatrapati Shivaji, Secretary, Ministry of Statistics & Programme Implementation (MoSPI) said, “The MSME sector comprises of over six crore enterprises, contributes nearly 29% of India’s Gross Domestic Product (GDP) and provides employment to over 11 crore workers. Being a vital engine for growth, it is important to continuously monitor and measure the strength, growth and progress of the MSMEs, so that policies can be aligned and timely interventions taken. MoSPI is happy to partner with TransUnion CIBIL to introduce the MSME Credit Health Index as a new and alternate data source for use in policy making for the MSME sector.”

The first version of the MSME Credit Health Index is based on data from March 2018 to June 2020. Explaining the insights as indicated in the MSME Credit Health Index, the MD and CEO of TransUnion CIBIL, Rajesh Kumar said, “TransUnion CIBIL is committed in providing insights and solutions to support the economic revival of the country and with the launch of the MSME Credit Health Index we further reassert our commitment by introducing a reliable, objective and sharp indicator of the strength, growth and stability of the MSME sector. The Index is available at national level and granularly across MSME segments, lender categories and geographies. The objective of the Index is to support MSMEs, lenders and policy makers with an efficient tool to monitor and benchmark the movement in the micro-ecosystems of the MSME sector. The ongoing monitoring of the index will provide insights for aligning strategies and policies towards efficient implementation of funds and resources for sustained development of the MSME sector and thereby the socio-economic growth.”