YoY growth in credit to MSEs remained negative for the third consecutive month in November (RBI data)

Credit and finance for MSMEs: Year-on-year (year-on-year) growth in gross bank credit extended to micro and small enterprises continued to be negative for the third consecutive month in November. Deployment in November 2021 was Rs 10.99 lakh crore, down minus 2.2% from Rs 11.23 lakh crore in November 2020, according to the latest Reserve Bank of India credit data. banking to the main sectors. Annual credit growth to MSEs was minus 0.5 percent in October and minus 2.6 percent in September against positive growth of 1.1 percent in August and 0.2 percent in July.

“The corporate sector has shown resilience and bank credit growth is showing signs of a gradual recovery, led by the retail segment. The stress is however visible among micro, small and medium enterprises (MSMEs) and in the microfinance segment, ”said RBI in its Financial Stability Report. According to the November 2021 cycle of the Systemic Risk Survey, the majority of respondents estimated that the Indian economy will fully recover from the fallout from the pandemic within a year or two, however, MSMEs and other sectors such as tourism and hospitality, aviation, automotive, real estate, retail and entertainment could experience a slower recovery over the next year.

In contrast, growth in credit to medium-sized enterprises remained positive. Banks rolled out Rs 2.42 crore lakh in November, from Rs 1.80 crore lakh during the period of last year – recording growth of 34.2% vs. 24.8%, from Rs 1 , 79 lakh crore in October 2020 to Rs 2.23 lakh crore in October 2021. In July, August and September, the annual growth rate was 70.9%, 54.6% and 24.3% respectively.

However, the share of MSMEs in total gross bank credit also fell slightly to 12.01% in November, compared to 12.17% in October, 12.04% in September and 12.15% in August. 2021. As of November 19, 2021, gross bank credit deployed by scheduled commercial banks amounted to Rs 111.62 lakh crore. Among other priority sectors, education loans also experienced negative growth of minus 8.5%, while others, including agriculture, housing, renewable energy, social infrastructure and home credit. exports, recorded positive year-on-year growth in November. The overall economic recovery, however, remains clouded because of Omicron.

“The global recovery is clouded by the emergence of the Omicron variant of COVID-19. Inflationary pressures persist and monetary policy paths diverge among major economies. Domestically, the recovery is picking up steam after the debilitating second wave of the pandemic, ”RBI said in its report.