New Delhi: While fund flows from NBFCs to micro, small and medium enterprises (MSME) have dried up in recent times, official data shows state-run banks too are cautious in lending with total credit outstanding to the sector growing at just 7.38 percent to Rs 8.81 lakh crore in the three-year period ending March 2019. As the sector is considered a key growth engine accounting for about 90 percent of businesses and more than 50 percent of employment, the credit growth pattern is a matter of concern.
Even as the government has come out with measures to promote the MSME sector, nudging banks to lend more, it is yet to reflect in actual numbers. One of the key steps announced is providing loans to smaller firms within 59 minutes of application but industry leaders point to sluggish Loan disbursal under the scheme. As per data compiled by the Reserve Bank of India (RBI), the outstanding credit of Public Sector Banks (PSBs) to the MSME sector increased from Rs 8.20 lakh crore in March 2016 to Rs 8.81 lakh crore in March 2019 (provisional). He further said that banks remain concerned with their rising non-performing assets (NPAs or bad loans) and scrutiny of their management.
In a meeting with the Union Minister for MSMEs Nitin Gadkari, the industry urged the government to provide short and medium term support to beat the slowdown in the economy. (IANS)
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