Importantly, the credit outstanding to the MSME sector by scheduled commercial banks in FY23 grew by 12.3 per cent to Rs 22.6 lakh crore from Rs 20.11 lakh crore in FY22.
Credit gap in the MSME sector: MSME Minister Narayan Rane on Monday informed Parliament that the government has not undertaken any specific study to evaluate the current credit gap in the MSME sector, post the Covid-19 pandemic. The minister was responding to a question that whether Government has conducted any official studies to evaluate the credit gap in the MSME sector post-pandemic and the major findings.
“However, the Expert Committee on Micro, Small and Medium Enterprises, constituted by the Reserve Bank of India in December 2018 has estimated the overall credit gap in the MSME sector to be in the range of Rs 20 to Rs 25 trillion (Rs 20 lakh crore to Rs 25 lakh crore),” said Rane.
Meanwhile, according to World Bank estimates, the credit gap in India’s MSME sector is almost $380 billion. Another study by investment banking company Avendus Capital recently estimated a credit gap of $530 billion in the MSME sector. Out of over 64 million MSMEs in India, the report said only 14 per cent have access to credit. While the overall finance demand by MSMEs was pegged around $1,955 billion with a 3.8x debt-to-equity ratio, the total demand for debt-based finance was approximately $1,544 billion.
To address the issue of the credit gap, Rane said the government has taken various measures including the Prime Minister’s Employment Generation Programme, credit guarantee scheme, Rs. 50,000 crore equity infusion through Self Reliant India (SRI) Fund, launch of Udyam platform and Udyam Assist Platform to bring more MSMEs into the formal ambit for availing the benefits under Priority Sector Lending, extending non-tax benefits for three years in case of an upward change in status of MSMEs, TReDS platform to facilitate invoice discounting for MSMEs, and more.
Importantly, the credit outstanding to the MSME sector by scheduled commercial banks in FY23 grew by 12.3 per cent to Rs 22.6 lakh crore from Rs 20.11 lakh crore in FY22, according to the data shared by Bhanu Pratap Singh Verma, Minister of State in the MSME Ministry in a written reply to a question in the Rajya Sabha last week.
The amount outstanding in FY21 and FY20 stood at Rs 17.83 lakh crore and Rs 16.13 lakh crore respectively. During the five-year period, the credit outstanding to the MSME sector grew by 49.6 per cent from Rs 15.10 lakh crore during FY19.