The deployment of gross bank credit under the priority sector lending norms to the MSME sector stood at Rs 28.4 lakh crore in March this year. The disbursed amount grew 15.2 per cent from Rs 24.6 lakh crore disbursed during the same period in the previous year, according to the latest data on sectoral deployment by the Reserve Bank of India (RBI). The credit disbursed was 15.6 per cent of Rs 182 lakh crore in India’s total non-food credit in March.
The amount deployed to micro and small enterprises (MSEs) grew by 13.5 per cent to Rs 22.4 lakh crore from Rs 19.7 lakh crore in March last year. Similarly, credit to medium enterprises increased by 22.6 per cent to Rs 6 lakh crore from Rs 4.9 lakh crore.
Meanwhile, to boost credit access to MSMEs, the government is looking at Rs 1-1.5 lakh crore credit guarantee cover in 2025-26 for enterprises under the new Mutual Credit Guarantee Scheme, FE had reported in March this year.
The scheme was announced in the July budget last year to enable collateral-free loans for MSMEs to purchase machinery or equipment. MSMEs having Udyam registration should not be an NPA (non-performing asset) with any lender while the minimum cost of equipment or machinery should be 75 per cent of the project cost to be eligible for the scheme.
Last week, policy think tank NITI Aayog in a report on boosting the competitiveness of MSMEs had called for bringing the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which operates the collateral-free credit guarantee scheme, under a “robust regulatory authority”.
The report had noted that the trust managing the CGTMSE fund lacks regulatory authority and oversight in its operations, governance, and access to state-owned funds. “The absence of the desired level of regulatory oversight at CGTMSE leads to challenges in balancing fund availability with financial discipline.”
NITI Aayog had also called for better on-lending structures and the provision of lower-rate wholesale funding to NBFCs as their borrowing costs from banks are typically high due to collateral requirements and risk premiums, making it challenging for them to offer competitive interest rates to MSMEs.
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