Credit and Finance for MSMEs: MSME industries’ credit jumped by nearly 20 per cent in FY21 and more than 35 per cent in FY22 after a negative growth of approximately 2 per cent in FY20 and around 3 per cent in FY19, hinting towards impact due to Covid.
Credit and Finance for MSMEs: In the post-Covid period, credit growth to MSMEs in the industrial sector was “distinctly higher” not only on a year-on-year basis but also in comparison with credit growth to large industries, said the Reserve Bank of India (RBI) in its latest Report on Trend and Progress of Banking in India for FY22 on Tuesday. The credit growth came on the back of the credit guarantee programme Emergency Credit Line Guarantee Scheme (ECLGS), coupled with lower gross non-performing assets (GNPA) ratios along with the addition of wholesale and retail trade in the MSME category in July 2021 that also helped boost the overall credit to the MSME sector, the central bank noted.
Credit to MSME industries grew by nearly 20 per cent in FY21 and over 35 per cent in FY22 after a negative growth of around 2 per cent in FY20, down from around 3 per cent in FY19, indicating Covid impact. In contrast, credit growth to large industries stood at around minus 5 per cent in FY21 and turned positive to around 3 per cent in FY22, according to the report.
Under the ECLGS scheme, banks have already supported over 1 crore MSMEs. As of November 30, 2022, 1.19 crore loans involving 71 per cent or Rs 3.58 lakh crore of the Rs 5 lakh crore ECLGS limit were sanctioned while 57 per cent or Rs 2.85 lakh crore loans were. Out of the total sanctioned amount, 66 per cent were extended to MSME borrowers while 95.17 per cent of loans sanctioned also belonged to MSMEs. The data was shared by the Minister of State in the finance ministry Bhagwat Karad in the Lok Sabha in the recently concluded winter session of the Parliament.