MSME Loan Quality Improves as GNPAs Decline to Rs 1.25 Lakh Crore in 2024

New Delhi, Dec 10 (KNN) The gross non-performing assets (GNPAs) in the micro, small, and medium enterprises (MSME) sector have shown a significant improvement, reflecting a positive trend in the health of the sector.

As of March 31, 2024, GNPAs in MSME credit stood at Rs 1.25 lakh crore, a reduction from Rs 1.30 lakh crore the previous year.

This decrease is part of a broader trend, with GNPAs falling from Rs 1.87 lakh crore in March 2020 and Rs 1.54 lakh crore in March 2022, as per data shared by Shobha Karandlaje, Minister of State in the Ministry of MSME, in a Lok Sabha response.

This decline is accompanied by an increase in the outstanding advances to MSMEs. From Rs 16.97 lakh crore in March 2020, the outstanding credit to MSMEs surged to Rs 28.04 lakh crore by March 2024.

As a result, the share of GNPAs as a percentage of total MSME credit has dropped from 11.03 per cent in March 2020 to 4.46 per cent by March 2024, signaling improved asset quality.

The improvement in MSME loan quality is further highlighted by the reduction in loan write-offs by scheduled commercial banks.

In FY24, Rs 20,261 crore in bad loans related to micro and small enterprises were written off, down from Rs 28,392 crore in FY23.

Over the past five years, the total amount of MSE loans written off amounted to Rs 1,08,608 crore, with public sector banks (PSBs) accounting for the largest share at Rs 73,358 crore, compared to Rs 32,098 crore written off by private banks.

The data also reveals that the number of cases classified as NPAs for scheduled commercial banks has increased slightly, from 41,06,379 cases as of March 2023 to 44,62,386 cases by March 2024.

Despite this, the overall trend of declining GNPAs is seen as a sign of resilience in the MSME sector, which is crucial for the Indian economy.

The government’s efforts to provide financial stability to MSMEs through various measures, including support from microfinance institutions (MFIs), continue to bolster the sector’s recovery.

(KNN Bureau)