MSME Bank Credit Rises 14.8% YoY In August 2024: RBI

New Delhi, Oct 1 (KNN) In a significant development for India's economic landscape, the Reserve Bank of India (RBI) has reported a substantial increase in bank credit to the Micro, Small, and Medium Enterprises (MSME) sector.

According to data released on Monday, priority sector lending to MSMEs by scheduled commercial banks saw a 14.8 per cent year-on-year growth in August 2024, reaching Rs 25.5 lakh crore compared to Rs 22.2 lakh crore in August 2023.

The growth was particularly pronounced in the medium enterprises segment, which experienced a 20.8 per cent increase, with credit rising to Rs 5.29 lakh crore from Rs 4.38 lakh crore in the previous year.

The micro and small enterprises (MSE) segment also showed strong performance, with a 13.5 per cent growth, as credit expanded to Rs 20.2 lakh crore from Rs 17.8 lakh crore.

In the current financial year, priority credit to the MSME sector has grown by 3.7 per cent since March 2024, with the medium enterprise segment outpacing the MSE segment at 7.9 per cent and 2.7 per cent growth, respectively.

Despite the robust growth, financial experts at Crisil anticipate a moderation in the credit growth rate for MSMEs in the current fiscal year. Projections suggest a growth rate of around 15 per cent, down from approximately 19 per cent in fiscal 2024.

RBI Governor Shaktikanta Das has highlighted the upcoming Unified Lending Interface (ULI) platform as a key initiative to facilitate ‘frictionless credit’ to various sectors, with a particular focus on MSMEs and agriculture. The platform is expected to exit its beta phase soon.

RBI Deputy Governor Michael Debabrata Patra recently shed light on the significant finance demand in the MSME sector, estimated at USD 1.9 trillion. Of this, USD 1.5 trillion represents debt-based demand.

Currently, formal credit lenders, including banks, fulfil USD 289 billion of the viable USD 819 billion debt demand from MSMEs.

This data underscores the critical role of the MSME sector in India's economy and highlights the ongoing efforts to bridge the financing gap in this vital segment.

(KNN Bureau)