Industry credit grew 13% in Nov due to robust growth in MSMEs: CareEdge | The Financial Express

Industry credit grew 13% in Nov due to robust growth in MSMEs: CareEdge

Credit and finance for MSMEs: Micro and small industries reported a 19.6 per cent growth in credit outstanding to Rs 5.6 lakh crore as of November 2022.

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In comparison to MSMEs, large industries’ recorded a 10.5 per cent credit growth as of November 2022.

Credit and finance for MSMEs: The credit outstanding of the industry segment registered a growth of 13.1 per cent year-on-year (YoY) in November 2022 from 4.4 per cent in the year-ago period due to robust credit growth in the MSMEs, higher working capital requirements, and capex, credit rating company CareEdge said. As of November 18, 2022, credit to the industry stood at Rs 32.9 lakh crore.

While micro and small industries saw 19.6 per cent growth in credit outstanding to Rs 5.6 lakh crore as of November 2022 from 15.3 per cent as of November 2021, medium industries recorded 29.7 per cent YoY growth with credit amounting to Rs 2.2 lakh crore as of November 2022 from 37.4 per cent growth as of November 2021. In comparison, large industries’ credit reported a YoY growth of 10.5 per cent to Rs 25.1 lakh crore from a drop of 0.6 per cent over a year ago.

Also read: Restructured loan share in banks’ MSME portfolios drop to 5.21% in Sept 2022: RBI report

Meanwhile, under priority sector loans, the total bank lending to the MSME sector, including credit MSEs and medium enterprises, in November, stood at Rs 18.26 lakh crore – 14.1 per cent of Rs 129.47 lakh crore overall gross bank credit deployed across sectors including food and non-food credit deployed during the month vis-a-vis Rs 15.24 lakh crore deployed in November 2021 – 13.6 per cent of Rs 111.62 lakh crore overall bank credit. Of Rs 18.26 lakh crore, Rs 14.57 lakh crore belonged to micro and small units and Rs 3.69 lakh crore to medium enterprises, according to the RBI data. 

“The credit growth stayed robust in November 2022 amid the significant rise in interest rates. The growth was also broad-based across the segments and is likely to remain strong in FY23. Retail and NBFCs are expected to be key growth drivers for the fiscal year,” CareEdge said.

Also read: Nearly 17% of ECLGS loans have turned into NPAs: RBI report

Since May last year, the Reserve Bank of India’s (RBI) monetary policy committee has increased the repo rate by 225 basis points (bps). The committee hiked the repo rate by 40 bps in May followed by 50 bps in each of the following three meetings and 35 bps in December. According to SBI’s Ecowrap report, the hike cycle will increase the interest cost for MSME and retail consumers by around Rs 68,625 crore with around 47 per cent of the loans benchmarked to external benchmarks (EBR).

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First published on: 08-01-2023 at 17:24 IST