Credit and finance for MSMEs: The government’s Mudra scheme for credit to micro enterprises by banks, small finance banks, non-banking financial companies, and other lending institutions saw around 8 per cent increase in loans sanctioned during the first half of the current financial year 2022-23. According to the official data on the Mudra portal, 2.19 crore loans involving Rs 1.58 lakh crore were sanctioned as of October 7 in the current fiscal in comparison to 2.03 crore loans involving Rs 1.13 lakh crore sanctioned as of October 8 during FY22.
With respect to disbursements, Rs 1.53 lakh crore loans were disbursed out of the sanctioned amount in H1 FY23, up 43 per cent from Rs 1.07 lakh crore loans disbursed during the year-ago period. Overall, 5.37 crore loans involving Rs 3.39 lakh crore were sanctioned during FY22 and Rs 3.31 lakh crore loans were disbursed.
The Mudra scheme was launched by Prime Minister Narendra Modi in 2015 for micro enterprises, which are generally proprietary concerns at the bottom of the entrepreneurial pyramid, seeking loans up to Rs 10 lakh.
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The growth in sanctions and disbursements has come amid a slight decline in the non-performing asset (NPA) levels for credit disbursed under the Mudra scheme in FY22, according to government data. Based on the provisional data as of March 31, 2022, shared by Minister of State in the Ministry of Finance Bhagwat Karad in a written reply to a question in Rajya Sabha in July this year, NPAs as a cumulative percentage of total Mudra loans disbursed in FY22 decreased to 3.17 per cent from 3.61 per cent in FY21 though still above pre-Covid 2.53 per cent in FY20.
The overall aggregate gross NPA ratio (public and private banks) in the MSME sector had also declined from 10.8 per cent in March 2021 to 9.3 per cent in March 2022, according to the Reserve Bank of India’s latest Financial Stability report.
“They, however, remain relatively high. Moreover, restructuring of (MSME) portfolios to the tune of Rs 46,186 crore constituting 2.5 per cent of total advances under the May 2021 scheme (resolution framework 2.0) has the potential to create stress in the sector,” the central bank had said.
Also read: Microfinance loans disbursed jump nearly 90% during June quarter from year ago: Report