Credit and finance for MSMEs: The share of restructured loans in the MSME portfolio of scheduled commercial banks (SCBs) stood at 5.21 per cent as on September 30, 2022, compared to 5.31 per cent as on March 31, 2022, said the December 2022 Financial Stability Report by the Reserve Bank of India (RBI). The outstanding balance in the restructured account as of September-end last year was Rs 1.07 lakh crore in comparison to Rs 1.06 lakh crore as of March end 2022 with the highest share of public sector banks (PSBs).
While PSBs had Rs 78,117 crore outstanding balance in the restructured account, private banks had Rs 29,068 crore in outstanding balance and foreign banks had Rs 675 crore as of September 30, 2022, the data showed. Restructuring of loans is referred to modifying the terms of an existing loan to make it easier for the borrower to repay the loan principal and interest, avoid defaulting and also slipping into the non-performing asset (NPA) category.
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According to the report, the gross NPA ratio (including PSBs and private banks) in the MSME sector fell from 9.3 per cent in March 2022 to 7.7 per cent in September 2022. Moreover, the asset quality of loans below Rs 25 crore, which are usually vulnerable to asset quality concerns, improved in September 2022 vis-à-vis March 2022. The March gross NPA ratio had moderated from 11.3 per cent in September 2021 to 9.3 per cent in March 2022, the June 2022 Financial Stability Report had noted.
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Meanwhile, SCBs’ gross NPAs in priority sector loans to micro and small enterprise stood at Rs 1.17 lakh crore for FY22 in comparison to Rs 1.28 lakh crore in FY21, according to the data from RBI’s Report on Trend and Progress of Banking in India for FY22 released in December. The share of MSE GNPAs out of total NPAs for banks was 16.87 per cent in FY22 and 16.47 per cent in FY21.