The estimated slowdown is in the backdrop of expected moderation in overall growth in bank credit by around 200 basis points (bps) to approximately 14 per cent this fiscal after an estimated robust growth of around 16 per cent in the previous fiscal.
Growth in bank credit to the MSME sector is expected to slow down this fiscal from the previous year amid moderate growth expected in overall bank credit. According to a statement by the ratings agency Crisil on Tuesday, bank credit growth in the MSME segment (which is around 16 per cent of overall credit) is estimated at around 15 per cent in the current FY, down from a robust around 19 per cent in fiscal 2024.
“This segment will be supported by a revival in downstream capex, the role of MSMEs in the central government’s Atmanirbhar Bharat initiative, and benefits accrued from the Productivity-Linked Incentive scheme. Also, with greater formalisation of the sector, including improving digital public infrastructure, the addressable base for banks has been expanding continuously,” Crisil said.
The estimated slowdown is in the backdrop of expected moderation in overall growth in bank credit by around 200 basis points (bps) to approximately 14 per cent this fiscal after an estimated robust growth of around 16 per cent in the previous fiscal.
Crisil said strong economic activity and retail credit demand drove loan growth last fiscal while it would be tempered in FY25 by “a high base effect, a revision in risk weights and a somewhat lower gross domestic product (GDP) growth.”
Banks had deployed Rs 24.67 lakh crore to the MSME sector under priority sector lending in March this year, growing by 19.2 per cent from Rs 20.69 lakh crore deployed in March 2023, according to the latest data on sectoral deployment by the Reserve Bank of India (RBI). Total bank credit