Credit and Finance for MSMEs: Growth in gross bank credit by banks to micro and small enterprises (MSEs) in the first month of the new financial year 2020-21 stood at 3.3 per cent to Rs 11 lakh crore from Rs 10.65 lakh crore in April FY20, according to the RBI data. However, there was a contraction of 4.4 per cent from Rs 11.49 lakh crore in the preceding month of March (FY20), RBI said in its June bulletin. Since April FY20, the growth in MSE credit by banks had remained contracted till December even as July and August witnessed the highest contraction at minus 1.8 per cent. From Rs 10.67 lakh crore credit deployed to MSEs as on March 29, 2019, the amount deployed stood at Rs 11 lakh crore as on January 31, 2020, followed by Rs 10.95 lakh crore as on February 28, 2020.
“From December or January to March, the orders from MSMEs go up as government or PSUs look to fulfil their annual target of procurement from small businesses. Banks too have to meet their annual MSME disbursement target. So amount deployed to MSMEs goes up from banks,” Pankaj Kumar, President, Indian Industries Association had told Financial Express Online.
The credit deployment in manufacturing MSEs in April stood at Rs 3.58 lakh crore – down 6.2 per cent from Rs 3.81 lakh crore in March. Year-on-year too the growth showed a contraction of 2.2 per cent from Rs 3.66 lakh crore in April FY20. Similarly, bank credit growth to MSEs in services business also registered a decline 3.3 per cent from Rs 7.67 lakh crore in the preceding month to Rs 7.42 lakh crore in April. However, year-on-year, the deployment in services MSEs grew 6.2 per cent from Rs 6.99 lakh crore in April FY20.
Meanwhile, public sector banks had disbursed Rs 14.690.84 crore to Covid-hit MSMEs till June 11, 2020, under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), Finance Minister Nirmala Sitharman’s office had tweeted on Friday. The amount has been disbursed to over 3.75 lakh MSME accounts.