Credit and finance for MSMEs: The gross non-performing asset (GNPA) ratio pertaining to MSMEs in the scheduled commercial banks (SCBs) has 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 a written reply to a question in the Rajya Sabha on Tuesday. SCBs’ 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.
GNPA ratio is the ratio of the total gross NPAs of the total advances made by a lender in a particular period. Gross NPAs indicate the total value or amount of gross non-performing assets for the lender while net NPAs refer to subtracting provisions made by the lender in that period from GNPAs. A declining GNPA ratio means the lender’s asset quality is improving while provisions are a part of the lender’s profit or income that it sets aside for loans that may turn into losses ahead.
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GNPAs of the MSME sector with SCBs had declined by 5.1 per cent from Rs 1.63 lakh crore during FY18 to Rs 1.54 lakh crore during FY22 after increasing to Rs 1.82 lakh crore amid the Covid pandemic during FY21, the data shared by the minister of state for MSMEs Bhanu Pratap Singh Verma in the Lok Sabha in February noted. GNPAs in the MSME sector for FY19 and FY20 stood at Rs 1.61 lakh crore and Rs 1.62 lakh crore respectively.
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Among MSMEs, banks’ GNPAs in priority sector credit to micro and small enterprises (MSEs) amounted to Rs 1.17 lakh crore in FY22 in comparison to Rs 1.28 lakh crore in FY21, said a recent report by the recent Reserve Bank of India
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