The Reserve Bank of India (RBI) in its Annual Report said that there was a robust increase in the credit to micro, small and medium enterprises (MSMEs) at 14.1% YoY growth in March 2024.
This growth was supported by the availability of collateral-free loans, the RBI report said.
For the NBFCs, the report highlighted that the services sector bank credit rose by 20.2% in March 2024, driven by demand from non-banking financial companies (NBFCs) and trade.
However, the pace of expansion of bank credit to NBFCs moderated following regulatory measures announced by the RBI in November last year.
MSME in bank credit expansion:
RBI in its Annual Report also highlighted that there was a robust expansion in bank credit, which was led by services, agriculture, retail and MSME sectors.
Further, the data highlighted that on a y-o-y basis, the outstanding credit to the MSMEs by SCBs expanded by 20.9% during 2023-24, up to end-December 2023.
MSME loan under Frictionless Credit:
MSME loans of Rs 3,640 crore, as on March 31, 2024, has been sanctioned under the Public Tech Platform for Frictionless Credit (PTPFC) project, operationalised by the RBIH, the report said.
The overall loans disbursed by the banks was Rs 5,535 crore under the project.
MSME loan over repo rate
In the case of loans linked to the policy repo rate, the spread in respect of fresh rupee loans, i.e., Weighted Average Lending Rate (WALR) over the repo rate, was the highest for education loans, followed by micro, small and medium enterprise (MSME) loans
Government on MSMEs:
In Union Budget 2023-24, the government announced the revamping of credit guarantee scheme for micro and small enterprises with effect from April 1, 2023, with an infusion of Rs 9,000 crore to the corpus to enable additional collateral-free guaranteed credit of Rs 2 lakh crore and the reduction in the cost of the credit by about 1%.
Besides, the limit on ceiling for guarantees has been enhanced from Rs 2 crore to Rs 5 crore.
