While credit to medium, small and micro enterprises (MSMEs) has been seeing double-digit growth, much of it may have benefited MSME players in the services sector rather than those in manufacturing.
While credit to medium, small and micro enterprises (MSMEs) has been seeing double-digit growth, much of it may have benefited MSME players in the services sector rather than those in manufacturing. Bank credit outstanding to MSMEs grew a mere 0.2% year-on-year (y-o-y) to Rs 3.61 lakh crore, as on May 25, shows data released by the Reserve Bank of India (RBI).
This suggests there has been little improvement in manufacturing MSMEs’ access to credit from a year ago. On May 26, 2017, bank credit outstanding to manufucturing MSMEs stood at R3.6 lakh crore, 0.1% higher than a year ago.
Credit to MSMEs as a whole grew 9% y-o-y in May 2018, with the growth being driven almost entirely by enterprises in the services sector. Outstanding loans to services MSMEs grew 15% y-o-y to `5.9 lakh crore. Credit growth in this category showed a significant improvement from the previous year, when it had grown by 5% y-o-y.
Last week, credit bureau TransUnion Cibil and the Small Industries Development Bank of India (Sidbi) had released a report which stated that for the period March 2017 to March 2018, entities with a credit exposure of under R25 crore saw a credit growth of 15.4%.
Enterprises with a credit exposure of under Rs 10 lakh saw a credit growth of 35%, while those with an exposure between R10 lakh and R50 lakh clocked 21%. Enterprises whose credit exposure ranges between R1 crore and R5 crore saw credit grow by 17% on a y-o-y basis, according to the report, which did not make a distinction between manufacturing and services enterprises.
Also, public-sector banks’ (PSB) market share in credit to MSMEs dropped to 50.4% in March 2018 from 57% in March 2017 and 60.4% in March 2016. “The market share of private banks has grown from 27.5% (March 2017) to 30.3% (March 2018) and for NBFCs, it has grown from 9.1% to 10.9% during the period March 2017 to March 2018,” observed the report, titled MSME Pulse.