Credit and Finance for MSMEs: Overall credit growth has picked up rapid pace beginning September 2019 jumping by Rs 1.08 lakh crore, courtesy, Housing, NBFC and lately MSME sector.
Credit and Finance for MSMEs: Monthly growth in credit to industry has turned positive for the month of September in the current financial year by Rs 9,700 crore out of which Rs 8,200 is attributable to the MSME sector with a 6.2 per cent year-on-year growth though down from 9.5 per cent in September 2018, according to an SBI report. The credit flow in April this year to MSMEs stood negative at Rs 1,200 crore. Overall “credit growth has picked up rapid pace beginning September 2019 jumping by Rs 1.08 lakh crore, courtesy, Housing, NBFC and lately MSME,” SBI Ecowrap report said.
Importantly, the growth in credit to the MSME sector has contracted by 3.85 per cent in the current FY, the RBI had said in its October bulletin, while the shrinkage in the micro and small enterprises (MSE) was higher than that in the medium enterprises. For MSEs, the amount shrunk 4.4 per cent from Rs 3.75 lakh crores in March 2019 to Rs 3.58 lakh crores in August 2019. For medium businesses, it contracted by 1.8 per cent.
Finance Minister Nirmala Sitharaman in August this year had asked banks to not declare stressed loan account of MSMEs as non-performing assets (NPA) till March 31, 2020, and instead suggested recasting MSME loans even if more credit is to be given to the MSME. According to the minister, banks had identified some NBFCs to give capital to further ease liquidity access to MSMEs. Public sector banks had disbursed loans worth Rs 81,781 crore during the nine-day loan mela between October 1 and October 9 this year, according to finance secretary Rajeev Kumar.
Public sector banks total credit outstanding to MSMEs went up marginally by 7.38 per cent from Rs 8.20 lakh crore in FY16 to Rs 8.81 lakh crore in FY19, according to the RBI data while for FY17 and FY18, the amount stood at Rs 8.28 lakh crore and Rs 8.64 lakh crore respectively.