Credit and finance for MSMEs: Bank credit deployed to the retail and wholesale trade in December 2022 increased by 13.7 per cent year-on-year (YoY) to Rs 7.68 lakh crore from 14.7 per cent during December 2021 at Rs 6.75 lakh crore, as per the latest data by the Reserve Bank of India (RBI) on bank credit deployment to various sectors. In contrast, the YoY credit growth in November 2022 stood at 16 per cent to Rs 7.33 lakh crore from 10.2 per cent during November 2021 at Rs 6.32 lakh crore.
Among the wholesale and retail trade, part of the MSME category since July 2021, retail trade was deployed Rs 3.91 lakh crore in bank credit in December, up 17.9 per cent from Rs 3.32 lakh crore deployed in December 2021. In comparison, Rs 3.76 lakh crore was deployed to wholesale trade (other than food procurement) in December 2022, increasing by 9.7 per cent from Rs 3.43 lakh crore in December 2021.
Also read: Retailers, wholesalers top MSME registrations on Udyam portal: Govt data
The credit deployed grew nearly 5 per cent month-on-month in December from November. The growth came amid the government and SIDBI bringing retail and wholesale traders at par with other borrowers in December 2022 with respect to loans under the credit guarantee scheme of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). As a result, the credit limit for MSEs into retail and wholesale trade with guarantee cover was increased from Rs 1 crore to Rs 2 crore.
“Over the period of time, we saw the behaviour of loan portfolio of retail and wholesale trade almost at par with other loans. Moreover, since retail loans have been growing rapidly as compared to the traditional loans, we thought it is high time to bring them at par with other loans,” Sandeep Varma, Chief Executive Officer, CGTMSE had earlier told FE Aspire.
Moreover, with the government’s focus on the formalisation of the MSME sector, a number of such traders have registered themselves on the Udyam portal for the benefit of priority sector lending from banks. In fact, retail and wholesale traders had topped the table of the top 10 segments or sub-sectors in the MSME sector based on the number of registrations on the Udyam portal.
As of February 2, 2023, out of around 1.38 crore Udyam-registered MSMEs, the top 10 categories or segments contributed for 96.47 lakh registrations, of which 19.7 lakh – maximum registrations – were of retail traders and 12.3 lakh, the second highest number of registrations, were of wholesale traders except those dealing with motor vehicles and motorcycles, according to the data shared by the minister of state in the MSME ministry Bhanu Pratap Singh Verma in a written reply to a question in the Rajya Sabha recently.
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