Tradeindia Exim Newsletter
13, July 2021
MSME credit

Credit is the lifeline of MSMEs, and it is particularly true amid the ongoing pandemic, combined with unpredictable market situations. But unfortunately, credit availability has always remained a big problem for the sector. Recent RBI data has brought this bitter truth again to the fore. According to the central bank, bank credit growth to medium and small enterprises for April declined -- for the first time since Covid struck last year -- 2.2 percent y-o-y.

According to data released by the central bank, banks deployed Rs 10.60 lakh crore in the first month of the financial year 2021-22, against Rs 10.84 lakh crore in April 2020. While such data is churned out regularly, what is more important is the fact that despite several efforts by the government, the sector is still facing a big challenge in the form of credit crisis. There still remains a lot of room to do more for our MSMEs, at least to help them recover from the brunt of the pandemic.

Meanwhile, the RBI last week asked banks to monitor their exposures to the retail and MSME sectors as both these sectors are witnessing high stress although banks' exposure to better-rated large borrowers is declining. This reflects the fact that some sectors, including MSMEs, have been hit by Covid-19 more severely than some others, and this is why the Centre, the state governments and the banks – all should now come together to help the MSME sector with adequate and timely credit.

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