RBI data shows fall in credit deployment to MSME sector

New Delhi, Oct 1 (KNN) The credit deployment to the MSME sector has again shown a down fall. According to the RBI data, the Deployment of Gross Bank Credit by Major Sectors to the MSME as well as Large sector has fallen by 4.1 per cent in the period March 18, 2016 to August 19, 2016.

Around the same period last year, the credit deployment to the industry sector was -1.3 per cent.

The credit to the Micro and Small sector during March 18, 2016 to August 19, 2016 has fallen by 4.6 per cent while that to the Medium sector has fallen by 6.1 per cent.

The credit to MSEs under the Priority Sector Lending too has shown a downfall. During the period March 18, 2016 to August 19, 2016, it has fallen by 1.0 per cent.

Meanwhile, the credit deployment to Services sector, which had shown a fall of 1.6 per cent during March 20, 2015 to August 21, 2015, has shown a positive sign this time.

During March 18, 2016 to August 19, 2016, the credit to Services sector has increased by 1.2 per cent.

Highlighting the financial crunch faced by MSMEs, a recent report by CRISIL and Asocham has pegged the total credit demand for the sector at Rs 45 lakh crore over the medium term while Rs 5.15 lakh crore needs to be mobilized for the near term.

"Crisil estimates show Rs 11.37 lakh crore is only a quarter of the total funding demand of MSMEs. The rest is met either through informal sources and self-financing," said a joint study by Crisil-Assocham.

Crisil study highlights that Rs 45 lakh crore would be the total credit demand for the MSME sector over the medium term. (KNN Bureau)