MSME sector accounted for a share of around 18 per cent in the total credit to the industry and around 5 per cent in the total non-food credit extended by the scheduled commercial banks in November 2020, as per RBI data. Credit growth to MSMEs, which has generally remained subdued in the recent years, received a further setback due to the pandemic. “However, there has been a turnaround in credit to this sector in the recent months mainly due to a sharp increase in credit extended to the medium industries. Owing to the sharp increase in credit growth to medium industries, the overall credit to MSMEs in November 2020 accelerated to 5.0 per cent as compared to a contraction of 0.6 per cent a year ago,” the bulletin said. Medium industry’s credit deployed in December was Rs 1.23 lakh crore, up 15.3 per cent from Rs 1.07 lakh crore in December 2019. Emergency Credit Line Guarantee Scheme (ECLGS) and the subordinate debt scheme were the key post-Covid credit measures taken by the government to support pandemic-hit small businesses.
December also saw continued growth in credit deployment to MSEs in the manufacturing sector from October and November after being in red from April till September in the financial year. The outstanding as of December 18, 2020, for manufacturing MSEs was Rs 3.69 lakh crore, up 1.2 per cent from Rs 3.65 lakh crore as of December 20, 2019. The November and October YoY growth stood at 0.5 per cent and 0.7 per cent respectively. The growth had remained contracted by minus 2.2 per cent, minus 3.4 per cent, minus 3.7 per cent, minus 1.9 per cent, minus 1.2 per cent, and minus 0.1 per cent during April, May, June, July, August, and September, respectively.
Credit growth for MSEs in the services sector also remained positive in December. From 10.2 per cent YoY growth in September, 10 per cent in October, and 9.1 per cent in November, services MSEs saw deployment up by 9.4 per cent in December 2020 worth Rs 7.61 lakh crore vis-à-vis Rs 6.96 lakh crore in December 2019. However, the growth in FY21 till December remained contracted at minus 0.7 per cent from Rs 7.67 lakh crore in March 2020.