The TAT for processing loans to MSMEs is improving in all three lender segments; NBFCs being the fastest: report

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The TAT for processing loans to MSMEs is improving in all three lender segments; NBFCs being the fastest: report

New Delhi, September 20 (KNN) There has been an increase in turnaround times (TATs) for loan processing across all three lender segments, with NBFCs being the fastest, according to the joint TransUnion CIBIL-SIDBI report.

Non-bank financial corporations (NBFCs) have historically posted the lowest AFR compared to other lender categories, and their AFR decreased from 24 days in 2016 to 18 days in 2018.

While public sector banks still have the longest TAT, they have demonstrated the maximum reduction in TAT for the MSME segment from 41 days to 31 days. Private sector bank TATs have been reduced from 32 days to 29 days, according to the MSME Pulse report.

The report attributes the lower NBFC’s TATs to a higher proportion of program-based parameterized loans.

The average turnaround time (TAT) for the MSME segment to obtain credit fell from 29 days in 2017 to 26 days in 2018, according to a joint TransUnion Cibil-SIDBI report.

“The data shows that from 2016 to 2018, TAT has continuously improved for the underwriting of the MSME segment. In 2016, the TAT was 32 days. This was reduced to 29 days in 2017 and again to 26 days in 2018, ”the report says, MSME Pulse.

The TAT for companies with a segment up to Rs 10 lakh has increased from 23 days in 2017 to 18 days and from 26 days in 2017 to 24 days in segments ₹ 10 lakh to ₹ 1 crore.

The TAT went from 31 days in 2017 to 32 days in the ₹ 1 crore to ₹ 10 crore segment, and from 36 days in 2017 to 37 days in the ₹ 10 crore to ₹ 25 crore segment.

The study also found little improvement in TAT for larger segments, as most bank digitization initiatives focus primarily on low-ticket segments.

The TAT is defined as the number of days between the date of the investigation and the date of the sanctioned loan or the date of renewal.


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