Bank credit to micro and small businesses jumped 23% in June from a 0.6% contraction a year ago: RBI data


Credit and financing for MSMEs: Bank credit to micro and small enterprises (MSEs) continued to grow year-on-year (YoY), registering a growth of 23.7% in June 2022 compared to a contraction of 0.6% in June 2021, according to the latest data from the Reserve Bank of India (RBI) on the sectoral deployment of bank credit. Gross bank credit deployed to MSEs in June stood at Rs 14.29 lakh crore compared to Rs 11.55 lakh crore deployed in June last year and Rs 11.62 lakh crore in June 2020.

In May, credit growth stood at 27% with Rs 14.23 lakh crore deployed in MSEs, compared to Rs 11.20 lakh crore in May 2021. Similarly, a jump of 19.7% was recorded in April with Rs 14.08 lakh crore deployed in MSEs in comparison to Rs 11.77 lakh crore in April 2021.

Banks reported healthy year-on-year credit growth of 60% for medium-sized businesses as well as Rs 3.63 lakh crore deployed in June this year compared to Rs 2.26 lakh crore in June 2021. Growth was higher at 64.8% in May 2022 with Rs 3.57 lakh crore deployed compared to Rs 2.16 lakh crore in the period a year ago.

Overall bank credit deployed across the MSME sector in June was Rs 17.93 lakh crore, slightly up from the Rs 17.81 lakh crore deployed in May and Rs 17.63 lakh crore in April. The share of bank credit to MSMEs in India’s gross bank credit of Rs 121.49 lakh crore in June 2022 stood at 14.76%, down slightly from 14.80% in May.

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Overall credit to MSMEs has been on a recovery trajectory since December last year without any significant impact from the third wave of the pandemic after registering negative year-on-year growth from September to November.

“The upsurge in domestic demand and the recovery of ancillary industries and service units have increased the financing needs of this (MSME) sector, which provides employment to a large part of the population,” RBI noted in its latest report. financial stability report launched in June. This year. The Emergency Line of Credit Guarantee Scheme (ECLGS) has played a key role in reviving the MSME sector with loans amounting to Rs 3.32 lakh crore sanctioned till April 30, 2022, including one amount of Rs 2.54 lakh crore has been disbursed, according to the report. .

However, the central bank had also noted that the restructured portfolio of MSMEs (worth Rs 46,186 crore) constituting 2.5% of the total advances under the May 2021 Resolution 2.0 program has the potential to “creating stress” in the sector even though bad assets in the sector had fallen from 11.3% in September 2021 to 9.3% in March 2022.


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