According to recent data from the Reserve Bank of India (RBI), the share of credit extended to Micro, Small, and Medium Enterprises (MSMEs) in banks’ non-food credit reached 15% in October. The gross bank credit deployed by scheduled commercial banks for MSMEs under priority sector lending stood at Rs 23.15 lakh crore, marking a 22.8% increase from Rs 18.8 lakh crore in October last year and an 11.8% rise from Rs 20.6 lakh crore in September this year.

Robust Growth in MSE Credit

Within MSMEs, credit to micro and small enterprises (MSEs) experienced a notable 24.2% growth, reaching Rs 18.53 lakh crore compared to Rs 14.92 lakh crore during the same period last year. Similarly, credit to medium enterprises increased by 17.3% to Rs 4.61 lakh crore from Rs 3.93 lakh crore in October last year.

Concerns Raised by FICCI Survey

Despite the upward trend in MSME credit, a survey conducted by FICCI involving 610 respondents highlighted challenges. Collateral-free credit, touted on paper, reportedly faces implementation issues, with banks often requiring collateral for loan approvals. The survey also pointed out hesitancy from banks in providing financing to SMEs, and certain government schemes, like the Credit Guarantee Fund Trust for Micro and Small Enterprises Scheme (CGTMSE), facing limited effectiveness in aiding SMEs.