Credit and Finance for MSMEs: Bank credit to micro and small enterprises (MSEs) in February 2022 jumped 8.4 per cent to Rs 13.12 lakh crore from Rs 12.11 lakh crore in February 2021, latest data on sectoral deployment of gross bank credit from the Reserve Bank of India (RBI) showed. The year-on-year (YoY) growth in credit deployment to MSEs has been positive since December 2021 despite the third wave of the pandemic that seemingly had minimal impact on businesses and trade. While December growth was at 9.1 per cent from the year-ago period, deployment in January was up by 4.8 per cent from January 2021. The YoY growth in deployment for three consecutive months from September to November was negative.
Medium enterprises also reported a 43.3 per cent increase in bank credit to Rs 2.98 lakh crore in February from Rs 2.07 lakh crore during the year-ago period. This was relatively higher than the 42.1 per cent growth in deployment in January even as the highest growth rate during the financial year 2021-22 was recorded at 70.9 per cent in July.
The overall bank credit deployed to the MSME sector in the country stood at Rs 16.10 lakh crore in February — 13.8 per cent of India’s total gross bank credit of Rs 116.27 lakh crore that increased by 7.9 per cent from Rs 107.74 lakh crore in February 2021. The share of bank credit to MSMEs in total gross bank credit in December and January was 13 per cent and 13.11 per cent respectively.
Subscribe to TheSpuzz SME newsletter now: Your weekly dose of news, views, and updates from the world of micro, small, and medium enterprises
Despite the massive credit requirement by the MSME sector, there is currently no official study undertaken yet by the central government to estimate the current credit gap, MSME Minister Narayan Rane had said in a written reply to a question on the credit gap in Rajya Sabha last month. However, according to the 2019 report by the UK Sinha Committee constituted by the RBI, the overall credit gap in the MSME sector was estimated to be Rs 20-25 lakh crore. The credit gap is referred to the difference between the total supply of credit from formal channels in the country vis-a-vis the addressable demand.
Meanwhile, the Cabinet led by Prime Minister Narendra Modi had earlier this week approved the Rs 6,000-crore programme Raising and Accelerating MSME Performance (RAMP) to support 5.55 lakh MSMEs impacted due to Covid. The five-year programme would commence in the current financial year.