Credit growth of MSEs dips in September than last year

New Delhi, 3 Nov (KNN) Despite of the post covid economic recovery and following two months of positive growth in year-on-year (YoY) gross bank credit deployment to micro and small enterprises (MSEs), the credit growth has again slipped into negative in September 2021.

According to Reserve Bank India’s (RBI) latest data, banks deployed INR 11 lakh crore, down minus 2.6 per cent from INR 11.13 lakh crore in September 2020 for MSE sector.

The previous RBI repot stated that the contraction followed 0.2 per cent of YoY growth in July and 1.1 per cent growth in August 2021 after the preceding three months of negative YoY growth from minus 2.2 per cent in April to minus 3.6 per cent in May and minus 3.5 per cent in June.

While the YoY bank credit growth remained positive but the growth rate continued to decline to 24.3 per cent in September 2021 from 54.6 per cent in August, and 70.9 per cent in July, for medium enterprises.

It is important to note that the total gross bank credit of INR 13.20 lakh crore deployed to the MSME sector in September 2021 was 12.04 per cent of India’s overall gross bank credit of INR 109.56 lakh crore.

This was marginally down from 12.15 per cent in August 2021. The overall bank credit in September, however, was up from INR 108.97 lakh crore in August. In comparison, the total bank credit in July was INR

109.10 lakh crore and INR 108.41 lakh crore in June.

However, the government in September had extended its flagship post-Covid credit guarantee scheme for MSMEs, ECLGS to March 31, 2022.

Under the ECLGS,  loans sanctioned had crossed INR 2.86 lakh crore as of September 24, 2021.

And out of total guarantees issued, about 95 per cent were for loans sanctioned to MSMEs, the Finance Ministry had said in its statement.