Bank credit to MSMEs grew 71% during FY15-FY22 period: Govt data

Credit and finance for MSMEs: Credit to micro, small and medium enterprises (MSMEs) by scheduled commercial banks in the past eight years has grown by 71 per cent from Rs 11.71 lakh crore deployed during the financial year 2014-15 to Rs 20.11 lakh crore during the financial year 2021-22. 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 Lok Sabha, the number of MSME loan accounts, which received credit, grew by 201 per cent from 139.14 lakh in FY15 to 420.19 lakh in FY21 but declined to 264.67 lakh MSMEs in FY22 despite growth in the loan amount.

The maximum beneficiaries of the bank credit were micro enterprises with loan accounts jumping from 120.19 lakh involving Rs 4.23 lakh crore in FY15 to 387.93 lakh involving Rs 8.21 lakh crore in FY21. In FY22, the loan account volume dropped to 239.58 lakh even as the amount grew to Rs 8.82 lakh crore. In comparison, only 18.03 lakh small enterprise accounts raised Rs 5.37 lakh crore in FY15 while in FY21, 27.82 lakh accounts raised Rs 6.62 lakh crore in FY21. In FY22, 21.88 lakh small enterprises raised Rs 7.22 lakh crore. 

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Medium enterprises had the lowest share with only 92,000 units securing Rs 2.09 lakh crore in FY15 and 4.44 lakh units securing Rs 2.99 lakh crore in FY21. In FY22, 3.22 lakh medium enterprises had raised Rs 4.06 lakh crore. 

Notwithstanding the Covid pandemic, financial institutions had disbursed credit to MSMEs and self-employed individuals under the government’s Emergency Credit Line Guarantee Scheme (ECLGS) launched in May 2020. The scheme sanctioned 1,19,27,348 loans involving Rs 3,60,539 crore as of December 31, 2022, according to the data shared by Verma in February this year in the Parliament. Maximum loans — 95,41,572 involving Rs 2,36,999 crore were issued in FY21 while in FY22, 23,00,424 loans involving Rs 99,377 crore were issued. In FY23 till December-end, 85,352 loans involving Rs 24,162 crore were sanctioned. 

Also read: ECLGS prevented Rs 2.2-trn MSME loans from turning into bad loans: SBI report

Meanwhile, banks’ gross non-performing asset (GNPA) ratio pertaining to MSMEs had dropped to 6.1 per cent as of December 12 in the current financial year, according to the data from the Reserve Bank of India (RBI) shared by the minister of state in the finance ministry Bhagwat Karad in the Rajya Sabha recently. Banks’ GNPA ratio in MSME loans in FY22 stood at 7.6 per cent, 7.3 per cent in FY21 and 8.9 per cent in FY20. 

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