New Delhi, Jun 22 (KNN) In a significant boost to Gujarat's economic landscape, credit offtake from Micro, Small, and Medium Enterprises (MSMEs) has witnessed a substantial increase during the financial year 2023-24.

This surge is primarily driven by robust industry expansion plans and the need to meet working capital requirements.

According to the latest report by the State Level Bankers' Committee (SLBC) Gujarat, bank advances have soared to Rs 10.16 lakh crore, marking a 19.98 per cent increase compared to Rs 8.46 lakh crore in FY2022-23. This growth rate represents a decadal high for the state's banking sector.

MSME advances stood at an impressive Rs 2.5 lakh crore, accounting for approximately 30 per cent of the total advances during the period. This figure represents a 19 per cent increase from the previous fiscal year's Rs 2.13 lakh crore.

A senior SLBC official, speaking on condition of anonymity, attributed this trend to the strong performance of MSME businesses and increased corporate advances. 

"MSME businesses are doing well, accounting for a large chunk of loan advances during the year. Additionally, corporate advances have been higher, primarily due to expansion plans and meeting working capital needs," the official stated, reported ET.

Key sectors driving this credit growth include pharmaceuticals, iron and steel, packaging, and engineering goods, with companies seeking loans for expansion. 

The textiles and chemicals sectors have also contributed to the increased credit offtake, primarily to address working capital needs.

The official further explained that Gujarat's manufacturing-heavy economy has benefited from favourable growth during the fiscal year, partly fuelled by the Production-Linked Incentive Scheme (PLI). 

This growth has spurred the need for expansions and infrastructure upgrades, further boosting credit demand.

Pathik Patwari, immediate past president of the Gujarat Chamber of Commerce and Industry (GCCI), offered additional insight: "Last financial year saw higher working capital requirements in different industries, mainly due to the delayed payment crisis. MSME companies' balance sheets have improved after Covid, encouraging banks to increase disbursals to this sector."

This surge in credit offtake reflects the resilience and growth potential of Gujarat's MSME sector, signalling a positive outlook for the state's economic future.

(KNN Bureau)