Bank credit to MSMEs: The gross bank credit by scheduled commercial banks deployed to micro and small enterprises (MSEs) under priority sector lending in June 2023 grew 19 per cent in comparison to 22.6 per cent growth during June 2022. According to the latest sectoral deployment data from the Reserve Bank of India (RBI), MSEs were deployed Rs 16.95 lakh crore in June vis-a-vis Rs 14.25 lakh crore in June last year. In comparison, Rs 11.62 lakh crore were deployed in June 2021.
Deployment in the medium-sized enterprise segment also recorded growth of 15.1 per cent to Rs 4.18 lakh crore in June this year from Rs 3.63 lakh crore in June last year wherein 48.1 per cent growth was recorded from Rs 2.45 lakh crore deployed in June 2021.
Also read: Banks’ gross NPAs in MSMEs dropped to five-year low in FY23; declined 14% from FY22
Overall, Rs 21.14 lakh crore bank credit under priority sector lending — 14.7 per cent of India’s total non-food bank credit worth Rs 143.6 lakh crore — was deployed in the MSME sector in June 2023 in comparison to Rs 20.20 lakh crore — 14.5 per cent of India’s total non-food bank credit worth Rs 138.5 lakh crore — deployed in the MSME sector in May 2023. For the year-ago period, that is June 2022, Rs 17.88 lakh crore – 14.4 per cent of non-food bank credit worth Rs 123.4 lakh crore — were deployed in the MSME sector.
Importantly, the credit outstanding to the MSME sector by scheduled commercial banks in FY23 had jumped 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 in June. The amount outstanding in FY21 and FY20 stood at Rs 17.83 lakh crore and Rs 16.13 lakh crore respectively.
Meanwhile, the MSME portfolio quality has improved as the gross non-performing assets (GNPAs) in MSME loans by scheduled commercial banks dropped by 14.3 per cent to Rs 1.31 lakh crore for FY23 from Rs 1.54 lakh crore during FY22, according to the data shared by Verma in a written reply to a question in the Rajya Sabha.
In fact, GNPAs during FY23 were the lowest in the past five years, peaking at Rs 1.83 lakh crore in FY20 from Rs 1.63 lakh crore in FY19 and declining to Rs 1.82 lakh crore in FY21 before shrinking to Rs 1.31 lakh crore in the previous fiscal.