Bank credit to MSMEs: The gross bank credit deployed by scheduled commercial banks to micro, small and medium enterprises (MSMEs) under priority sector lending in October stood at Rs 23.15 lakh crore, according to the latest data on sectoral deployment by the Reserve Bank of India (RBI). This was 22.8 per cent higher than Rs 18.8 lakh crore deployed in October last year and 11.8 per cent more than Rs 20.6 lakh crore deployed in September this year.
The October deployment was 15 per cent of banks’ Rs 154 lakh crore non-food credit during the month vis-a-vis 14.6 per cent of Rs 128 lakh crore non-food credit in October last year.
Out of the credit deployed in October to MSMEs, credit to micro and small enterprises (MSEs) grew by 24.2 per cent to Rs 18.53 lakh crore from Rs 14.92 lakh crore during the year-ago period. With respect to medium enterprises, credit deployed in October increased by 17.3 per cent to Rs 4.61 lakh crore from Rs 3.93 lakh crore in October last year.
Even as credit to MSMEs has scaled up, a latest survey by the industry body FICCI on small and medium enterprises (SMEs) involving 610 respondents had noted that collateral-free credit is only on papers and not implemented as banks provide loans only when collateral is offered by SMEs, FE Aspire had reported.
In addition, the survey said that there have been challenges in the implementation and reach of various schemes introduced by the government for MSMEs post Covid. For instance, the Credit Guarantee Fund Trust for Micro and Small Enterprises Scheme (CGTMSE scheme), which offers collateral-free loans up to Rs 5 crores with government assurance has not been effectively accessed by SMEs. The survey said that banks have been showing hesitancy in providing financing to SMEs.
With respect to the asset quality, the gross non-performing assets (GNPAs) in MSME loans by scheduled commercial banks had 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 Bhanu Pratap Singh Verma, Minister of State in the MSME Ministry in a written reply to a question in the Rajya Sabha in July this year.