NBFCs Lead With 42.4% YoY Growth In MSME Loans: RBI Report

New Delhi, Dec 28 (KNN) Non-banking Financial Companies (NBFCs) have taken the lead in Micro, Small, and, Medium Enterprise (MSME) loans, recording a remarkable 42.4 per cent year-on-year growth, stated Reserve Bank of India (RBI) on Wednesday.

As per RBI’s latest report on banking sector performance during 2022-23 and 2023-24, NBFCs outperformed banks by leveraging customised financing solutions, benefiting from the co-lending framework for priority sector lending.

This facilitated the inflow of credit to the MSME sector by NBFCs, capitalising on the cost-effectiveness of funds from banks and the extensive outreach of NBFCs.

In contrast to the 12.7 per cent and 12.4 per cent YoY growth in MSME credit by banks, NBFCs achieved credit growth rates of 21.2 per cent and 42.4 per cent in March 2022 and March 2023, respectively. 

“NBFCs have steadily expanded their MSME portfolio, addressing the credit needs of the sector and contributing to overall financial inclusion and economic growth,” said RBI in its report.

The report added, “MSMEs engaged in services account for a preponderant share of NBFC credit to the sector.”

(KNN Bureau)