Share of MSME loans in commercial loans by value jumps by more than 50% in five years: report

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Growth of 33 percent in value share and 47 percent in volume share of microenterprise loans among MSMEs was recorded from FY17 to FY21.

Credit and financing for MSMEs: Loans to micro, small and medium-sized enterprises, which account for a significant share of total commercial lending in volume, also saw an increase of nearly 52 percent in value. From 16.2 percent in FY17, the value of MSME loans in commercial loans rose to 24.6 percent in FY21, according to a new report on Aggregate Loan Data. MSME lending volume (credit exposure up to Rs 50 crore) accounted for 85% of commercial lending in March 2021, credit bureau CRIF High Mark said in its How India Lnds 2021 report. March 2021 in terms of active loans and 2.3% in terms of outstanding portfolio. Importantly, the share of micro and small business bank credit in India’s gross bank credit stood at 10.07 percent in July, according to data from the Reserve Bank of India. Gross bank credit was Rs 109.10 lakh crore in July.

The report also noted 33 percent growth in the value share and 47 percent in volume share of microenterprise loans among MSMEs from FY17 to FY21. market share, public and private banks dominated the overall market for commercial loans and loans to MSMEs (in value and volume). According to the report, private banks dominated the outstanding MSME loan portfolio with a share of 41.7%, while public sector banks dominated active lending with a share of 39.7% in March 2021. In addition, there was a growth of 37 percent. cent in value arrangements for loans to MSMEs from FY17 to FY21.

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With the ease of Covid-related restrictions, bank loans to MSEs in July showed growth of 0.2% to Rs 10.99 lakh crore from Rs 10.96 lakh crore in July of last year, data shows of the RBI. Credit growth turned negative in April this year to minus 2.2% after recording the weakest credit rollout growth at 2.5% in March this year amid the second wave of the pandemic. Growth was minus 3.6 percent in May and minus 3.5 percent in June.

According to the latest government data on the post-Covid flagship program for MSMEs – ECLGS, 60.6% of the loan limit of Rs 4.5 lakh crore was sanctioned as of July 2, 2021. Rs 2.73 lakh crore of loans were sanctioned, of which Rs 2.14 lakh crore were disbursed by partner banks and NBFCs. In addition, guarantees have been issued for loans made at around 1.09 crore MSME, MSME Minister Narayan Tatu Rane informed the Rajya Sabha in July.

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