Credit and Finance for MSMEs: Gross bank credit deployed to micro and tiny enterprises (MSEs) in December 2020 has enhanced 6.6 per cent to Rs 11.31 lakh crore from Rs 10.61 lakh crore for the duration of the year-ago period. The December year-on-year (YoY) credit development to MSEs was also up from 6.1 per cent YoY development in November 2020, according to the information from the Reserve Bank of India (RBI). Banks had deployed Rs 11.22 lakh crore to MSEs in November down from Rs 11.25 lakh crore in October. However, the December credit development continued to stay contracted by minus 1.5 per cent in the economic year 2020-21 so far even as it enhanced from November’s minus 2.4 per cent development and minus 2.1 per cent development in October in FY21. As of March 27, 2020, bank credit to MSEs stood at Rs 11.49 lakh crore, information from RBI’s February bulletin showed.
MSME sector accounted for a share of about 18 per cent in the total credit to the sector and about 5 per cent in the total non-meals credit extended by the scheduled industrial banks in November 2020, as per RBI information. Credit development to MSMEs, which has frequently remained subdued in the current years, received a additional setback due to the pandemic. “However, there has been a turnaround in credit to this sector in the recent months mainly due to a sharp increase in credit extended to the medium industries. Owing to the sharp increase in credit growth to medium industries, the overall credit to MSMEs in November 2020 accelerated to 5.0 per cent as compared to a contraction of 0.6 per cent a year ago,” the bulletin stated. Medium industry’s credit deployed in December was Rs 1.23 lakh crore, up 15.3 per cent from Rs 1.07 lakh crore in December 2019. Emergency Credit Line Guarantee Scheme (ECLGS) and the subordinate debt scheme had been the important post-Covid credit measures taken by the government to assistance pandemic-hit tiny organizations.
Also study: GeM: Share of MSE sellers on Amazon of govt acquiring more than doubles in 12 months total MSE count up 7X
December also saw continued development in credit deployment to MSEs in the manufacturing sector from October and November following getting in red from April till September in the economic year. The outstanding as of December 18, 2020, for manufacturing MSEs was Rs 3.69 lakh crore, up 1.2 per cent from Rs 3.65 lakh crore as of December 20, 2019. The November and October YoY development stood at .5 per cent and .7 per cent respectively. The development had remained contracted by minus 2.2 per cent, minus 3.4 per cent, minus 3.7 per cent, minus 1.9 per cent, minus 1.2 per cent, and minus .1 per cent for the duration of April, May, June, July, August, and September, respectively.
Credit development for MSEs in the services sector also remained positive in December. From 10.2 per cent YoY development in September, 10 per cent in October, and 9.1 per cent in November, services MSEs saw deployment up by 9.4 per cent in December 2020 worth Rs 7.61 lakh crore vis-à-vis Rs 6.96 lakh crore in December 2019. However, the development in FY21 till December remained contracted at minus .7 per cent from Rs 7.67 lakh crore in March 2020.