Credit and finance for MSMEs: Priority sector loans to micro and small enterprises (MSEs) by scheduled commercial banks saw 11.2 per cent year-on-year (YoY) growth in December 2022 vis-a-vis 11.4 per cent YoY growth in December 2021, according to the latest monthly data on sectoral deployment of bank credit by the Reserve Bank of India (RBI). The credit to MSEs jumped from Rs 13.72 lakh crore in December 2021 to Rs 15.26 lakh crore in December last year, also higher than Rs 14.57 lakh crore deployed in the preceding month of November 2022.
Credit to mid-sized businesses under priority sector lending also increased by 13.5 per cent YoY in December 2022, though significantly lower than the 59 per cent growth in December 2021. Banks deployed Rs 3.86 lakh crore in December 2022 compared to Rs 3.51 lakh crore deployed in December 2021. Month-on-month, credit to medium units in November 2022 was lower at Rs 3.69 lakh crore.
Also read: Over 14.5 lakh crore deployed to micro, small enterprises in November 2022: RBI data
In December, the aggregate credit deployed to the overall MSME sector, including MSEs and medium enterprises, was Rs 19.12 lakh crore – 14.3 per cent of Rs 133.04 lakh crore total bank credit including food and non-food credit. In comparison, Rs 17.13 lakh crore – 14.7 per cent of Rs 115.82 lakh crore overall bank credit was deployed in December 2021.
Among other sectors eligible for priority sector loans, agriculture and allied activities raised maximum loans amounting to Rs 16.17 lakh crore in December 2022, growing 14.8 per cent from Rs 14.57 lakh crore deployed in December 2021. Others including the housing sector raised Rs 6.17 lakh crore while educational loans amounted to Rs 58,998 crore, Rs 4,782 crore went to renewable energy units, Rs 2,473 crore to social infrastructure, Rs 15,673 crore towards export credit, etc.
Also read: CGTMSE: Budget 2023 puts Rs 9,000 crore in credit guarantee scheme for MSMEs
Importantly, to boost credit to the MSME sector, the finance minister Nirmala Sitharaman in her budget 2023 speech on Wednesday announced revamping the credit guarantee scheme under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with the infusion of Rs 9,000 crore in the corpus, effective April 1, 2023. The revamp will enable additional collateral-free credit of Rs 2 lakh crore to MSMEs while the cost of credit will be reduced by 1 per cent.
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