Scheduled commercial banks (SCBs) invested Rs 23.36 lakh crore under priority sector lending in MSMEs in November 2023, up 21.9 per cent from Rs 19.16 lakh crore deployed in November 2022, showed latest data on sectoral deployment of bank credit by the Reserve Bank of India (RBI). In October 2023, Rs 23.15 lakh crore was deployed in MSMEs under priority sector lending.
Rs 23.36 lakh crore deployed during November was 14.9 per cent of Rs 155 lakh crore non-food credit deployed by banks during the month vis-a-vis 14.8 per cent of Rs 128 lakh crore non-food credit in November 2022.
Along with credit growth, banks’ MSME portfolio has also further improved. As per RBI’s latest financial stability report, the MSME gross non-performing assets (GNPAs) have declined to 4.7 per cent in September 2023 from 6.8 per cent in March 2023 and 7.7 per cent in September 2022. In March 2022, the GNPA ratio was 9.3 per cent.
SMA-2 (loans unpaid for over 60 days and up to 90 days), however, rose slightly to 1.7 per cent in September 2023 from 0.9 per cent in March 2023, FE Aspire had reported.
Under the government’s ECLGS (Emergency Credit Line Guarantee Scheme) scheme, which expired on March 31, 2023, services and trade, which formed a third of the ECLGS disbursements, remained stressed and accounted for nearly half of the total delinquencies.
Meanwhile, for FY23, growth in credit to MSMEs by NBFCs was over three times that of banks, benefitting from their ability to offer customised financing solutions, as per RBI’s report on the performance of the banking sector during 2022-23 and 2023-24 so far. The co-lending framework for priority sector lending also facilitated the flow of credit by NBFCs to the MSME sector, leveraging on the low cost of funds of banks and the greater reach of NBFCs, it said.
While bank credit growth to MSMEs as of March 2023 was 12.4 per cent, the credit growth by NBFCs toMSMEsstood at 42.4 per cent.
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