Bank credit to small businesses jumps 6.4% in January; MSEs’ share dips marginally

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Updated: Mar 23, 2021 8:38 PM

Credit and Finance for MSMEs: MSEs had a 12.09 per cent share in the overall Rs 94.97 lakh crore gross bank credit deployed in January 2021, down from 12.11 per cent in December 2020.

loan moratorium, Supreme CourtBanks had deployed Rs 11.48 lakh crore to MSEs in January 2021. (Image: REUTERS)

Credit and Finance for MSMEs: The year-on-year growth in gross bank credit deployment to micro and small enterprises (MSEs) continued to be above the 6-per cent mark in January 2021. The credit deployed by banks in January stood at Rs 11.48 lakh crore, up 6.4 per cent from Rs 10.79 lakh crore in January 2020, according to the March 2021 bulletin of the Reserve Bank of India. However, the January YoY growth contracted marginally by 0.2 per cent from 6.6 per cent December YoY growth. The deployment in December 2020 was at Rs 11.31 lakh crore vis-à-vis Rs 10.61 lakh crore during the year-ago period. Importantly, the January credit growth in the financial year 2020-21 was finally out of the red. The growth had remained contracted till December 2020 in the financial year even as it improved from November’s minus 2.4 per cent growth and minus 2.1 per cent growth in October. As of March 27, 2020, bank credit to MSEs stood at Rs 11.49 lakh crore.

MSEs had a 12.09 per cent share in the overall Rs 94.97 lakh crore gross bank credit deployed in January 2021, down from 12.11 per cent in December 2020. The Emergency Credit Line Guarantee Scheme (ECLGS) and the Credit Guarantee Scheme for Subordinate Debt (CGSSD) launched by the government last year “have been duly supported by various monetary and regulatory measures by the Reserve Bank in the form of interest rate cuts, higher structural and durable liquidity, moratorium on debt servicing, asset classification standstill, loan restructuring package and cash reserve ratio (CRR) exemptions on credit disbursed to new MSME borrowers. These measures will not only help in ameliorating stress in the sector but also open new opportunities,” said ShaktiKanta Das, Governor, RBI in his speech at an event by Bombay Chamber of Commerce and Industry. The January bulletin didn’t disclose deployment towards MSEs in the manufacturing and services sectors.

Also read: Rs 20,000-cr subordinate debt scheme: Nine months after launch, only this many MSMEs benefited

According to the MSME Ministry’s FY21 annual report, as per the National Sample Survey (NSS) 73rd round, conducted by National Sample Survey Office, during 2015-16, there were 6.33 crore unincorporated nonagriculture MSMEs in India including 1.96 crore in manufacturing, 0.03 lakh in non-captive electricity generation and transmission, 2.30 crore in trade and 2.06 crore in other services. This excluded those MSMEs registered under (a)Sections 2m(i) and 2m(ii) of the Factories Act, 1948, (b)Companies Act, 1956 and (c) construction activities falling under Section F of National Industrial Classification (NIC) 2008, the annual report noted.

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