Loans to MSMEs shrank 7.1%: RBI

MUMBAI: Loans outstanding to micro, small and medium enterprise (MSME) sector fell by ₹34,627 crore during the nationwide lockdown, even as the government pushed banks to provide loans on easier terms to small businesses affected by the pandemic.

The latest disaggregated credit data released by the Reserve Bank of India (RBI) showed that loans to small businesses in the industries segment fell 7.1% to ₹4.52 lakh crore as of May 22 from ₹4.87 lakh crore as on March 27.

Since banks started working on the government’s guaranteed credit scheme from June 1, data on those disbursals are not reflected by RBI. Data showed that even after banks began their own Covid-19 emergency credit lines after the lockdown was eased, it did not alter their existing risk-aversion towards small businesses.

Madan Sabnavis, chief economist at Care Ratings, said the decline reinforces the view that despite starting their own emergency credit line schemes, banks had not opened their purse strings for MSMEs.

“Banks were not too keen to lend to small businesses and now with the guarantee being given, we are hoping there will be a pickup,” said Sabnavis.

Lenders have sanctioned ₹1.01 lakh crore in guaranteed loans to small businesses, of which ₹45,861 crore has been disbursed as on June 26, showed data tweeted by the office of Anurag Thakur, Union minister

LENDERS HAVE SANCTIONED ₹1.01 L-CR IN LOANS TO MSMES, OF WHICH ₹45,861 CR HAS BEEN DISBURSED

of state for finance.

To be sure, the RBI data cited above does not include small businesses engaged in services. While outstanding bank loans to all services businesses declined 2% in the same period to ₹25.43 lakh crore, the central bank does not offer the breakup for MSMEs.

Meanwhile, India Ratings and Research has analysed around 200 investment-grade rated and 226 speculative grade mid and emerging corporates (MECs).

Of this, 131 companies are eligible for the ₹3 trillion collateral-free loan, with 91% of them rated in the speculative grade, it said.

Under government guidelines, this loan is available only to those small businesses which have an outstanding debt of up to ₹25 crore and revenue up to ₹100 crore.

“The benefit of these (government) schemes, however, will be restricted to 30% of the overall rated portfolio with limited respite for high rated, large entities, by revenue,” India Ratings said in a note on June 30.

The problem, as Mint reported on June 28, is that while borrowers are lining up for increasing their limits through fresh loan sanctions, many remain reluctant to actually draw fresh funds.