Credit and Finance for MSMEs: The YoY growth in credit from banks to MSEs had remained negative at minus 2.2 per cent, minus 0.5 per cent, and minus 2.6 per cent during September, October, and November respectively last year.
Credit and Finance for MSMEs: The year-on-year (YoY) growth in bank credit to micro and small enterprises (MSEs) turned positive in December 2021 after negative growth for three straight months, the latest data from the Reserve Bank of India (RBI) showed. Credit deployed to MSEs in December jumped an impressive 9.1 per cent to Rs 12.53 lakh crore from Rs 11.48 lakh crore deployed during the year-ago period, RBI data on sectoral deployment of bank credit in December showed.
The YoY growth in credit from banks to MSEs had remained negative at minus 2.2 per cent, minus 0.5 per cent, and minus 2.6 per cent during September, October, and November respectively last year. Importantly, the month-on-month growth reported in December was a staggering 14 per cent from Rs 10.99 lakh crore deployed in November 2021 even as the Omicron variant had struck India in December with the first case reported on December 2 in Karnataka.
The impact of Omicron on credit deployment won’t be as severe as of first and second waves since restrictions were negligible during December. Whatever little impact one might see in December and January is likely to be reflected in the coming two months. However, I don’t think the latest wave would have any considerable impact on disbursements. Businesses have largely come out of the woods towards the end of last year and are expected to gain some momentum ahead even if there is, god forbid, another wave,” a former banker told Financial Express Online requesting anonymity.
Growth in credit deployed to medium enterprises also bounced back. From 34.2 per cent YoY jump in November and 24.8 per cent growth in October, banks deployed 50.4 per cent higher credit in December at Rs 2.76 lakh crore in comparison to Rs 1.83 lakh crore deployed in the year-ago period even as the growth rates for July and August were higher at 70.9 per cent and 54.6 per cent respectively.
The total bank credit deployed to the MSME sector in December 2021 was Rs 15.30 lakh crore, up 14 per cent from Rs 13.41 lakh crore in November 2021. As a result, the share of bank credit to MSME in India’s total gross bank credit of Rs 116.83 lakh crore in December also increased to 13 per cent from 12.01 per cent in November and 12.17 per cent in October.
To support credit deployment among MSMEs, the government had extended the popular credit scheme Emergency Credit Line Guarantee Scheme (ECLGS) for one more year till March 2023 and enhanced the scheme’s limit by another Rs 50,000 crore to a total of Rs 5 lakh crore. As of November 12, 2021, Rs 2.28 lakh crore loans were disbursed to MSMEs and other businesses out of Rs 2.82 lakh crore loans sanctioned, as per data from the National Credit Guarantee Trustee Company (NCGTC) cited by the Reserve Bank of India (RBI) in its Financial Stability Report.
