Chennai: Formal credit to micro, small and medium-sized enterprises has doubled in the five years since the pandemic. Although private banks account for the largest share of MSME credit, NBFC’s loans grew the fastest.
MSME Lending has witnessed strong growth in recent years. The total credit provided by private banks, PSU banks and NBFCS to MSMES is Rs 22.6 lakh, with the fiscal maturity expected to hit Rs 38.3 lakh – a 106 per cent increase. Formal credit to MSMES hit Rs 3.4 lakh in the last fiscal year.
Among them, the credit of private banks increased from Rs 7.9 lakh to Rs 16.1 billion in fiscal year 255, and is expected to further increase to Rs 18.55 lakh. PSU Bank believes that this fiscal credit rose from Rs 910 crore to Rs 135 crore and rose by Rs 14.8 lakh crore according to the nursing rating data.
NBFC’s MSME credit growth rate is the fastest, from Rs 1.6 lakh to Rs 5.3 crore of Rs 2.6 crore. NBFC became a key player in MSME loans, with a CAGR of 32% from FY21 to FY24, surpassing the growth rate of private banks (20.9%) and public sector banks (10.4%). The share of MSME loans in NBFC increased from 5.9% to 9.1%.
The growth of MSME credit has been supported by initiatives such as UDYAM registration, GST Sahay, TREDS and the development of digital public infrastructure, as well as policy measures and credit guarantee programs that contribute to. The pandemic has launched several initiatives to support MSMES.
In MSME credit, loans to property (LAP) increased from Rs 75 lakh to 50% in the two years ended September 2024, from Rs 75 lakh to Rs 11.3 lakh. Among them, the volume of microcircles increased by even higher, up 60%. NBFC dominates the micro loan segment below Rs 1 million with a market share of 45%.
