Bank loans to MSMEs fall short

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Despite several demands made by the state government, the performance of commercial banks in providing credit to state micro, small and medium enterprises (MSMEs) is unsatisfactory.

Commercial banks had granted loans of Rs 8,601.78 crore to 1,36,354 MSME units during the first quarter of the current fiscal year 2021-22.

However, in the first three months of the previous fiscal year, banks had provided Rs 8,873.93 crore to 2,17109 units. Although the amount has increased slightly this year, it is not satisfactory as the number of beneficiaries has dropped drastically. Last year there were closings and closings, but this year no such application was made, sources said. Additionally, if the amount is compared to 2019-20, which was a normal year, banks failed to meet the target, an official said.

Odisha’s commercial banks had provided loans in the amount of Rs 10,982 crore to 2,99,968 units during the first quarter of 2019-2020. Likewise, credit coverage to small and medium-sized enterprises also declined in the state during the first quarter.

While 1,79,905 small businesses received a credit between April and June 2020, it fell to 1,51,689 during the same period of this year. The number of medium-sized businesses also fell to 20,350 in 2021 (April to June) from 48,913 in 2020 (April to June).

The performance of the implementation of the Prime Minister’s Job Creation Program (PMEGP) is also not up to par. For fiscal year 2021-2022, a monetary margin target of Rs 183.50 crore has been assigned to various banks, which represents a 31.78% increase over the target for the previous fiscal year.

Odisha banks have met the monetary margin target of Rs 26.11 crore as of August 31, 2021. In addition, Odisha banks have sanctioned 628 PMEGP proposals during the current year 2021-2022 until ‘in August against an annual target of 6,000 accounts.

As of August of this year, the state government has forwarded 5,407 proposals under the PMEGP, of which only 628 have been sanctioned and 1,364 have been rejected. No less than 3,538 requests are still pending with the banks concerned.


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