Gross bank credit by scheduled commercial banks to micro, small and medium enterprises (MSMEs) under priority lending norms jumped by 14.6 per cent to Rs 26.01 lakh crore in September from Rs 22.68 lakh crore during September in FY23, showed latest data on sectoral deployment by Reserve Bank of India (RBI) on Thursday.
The total priority credit to MSMEs in September was 15.2 per cent of India’s non-food credit of Rs 171 lakh crore during the month.
According to the RBI data, credit to micro and small enterprise (MSE) segment in the MSME sector grew by 13.1 per cent to Rs 20.57 lakh crore during September from Rs 18.18 lakh crore during the year-ago period. Similarly, credit to medium enterprises jumped 20.8 per cent to Rs 5.43 lakh crore during September this fiscal from Rs 4.49 lakh crore during September in FY23.
In August, priority bank credit to MSMEs had increased by 14.8 per cent to Rs 25.5 lakh crore from August FY23.
To boost credit to MSMEs, RBI Governor in September this year at an event had suggested banks and financial institutions to develop tailored financial products and services specifically for MSMEs. Das had called for “flexible credit options, improving access to working capital, and providing financial support that accommodates the unique cash flow cycles and growth stages of MSMEs.”
“This can propel MSMEs to expand, enhance their productivity, and contribute more significantly to job creation,” the governor had noted.
However, credit growth to MSMEs in FY24 is likely to slow down from the previous year amid moderate growth expected in overall bank credit, ratings agency Crisil had said in May this year. The growth 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,” according to a statement by Crisil.