Revival of MSMEs signals Covid woes thing of past
After two consecutive years of low credit disbursal, micro small and medium (MSME) enterprises have reported a healthy credit offtake in the last fiscal year. As of March 31 this year, banks have reported 95 per cent disbursal of their annual target as compared to the 65 per cent disbursal in the 2020-21 fiscal.
MSMEs, often called the backbone of the industrial sector, were among the worst hit during Covid-19 pandemic and the lockdown. Labour shortage, drying up of orders, and liquidity crunch had hit the sector which comprises vendors and sub-vendors of bigger companies. Micro units were the worst hit as they, being the last in the value chain, saw business evaporate almost overnight. Credit offtake in the sector had reflected this.
However, the opening up of the economy as well as demand getting back in the market has seen these companies finding their rhythm again. The automobile industry was one of the sectors which had seen good business, and had managed to pass on their business needs to their vendors and sub vendors. Lending to the MSME sector is bracketed under priority lending with banks being mandated to extend credit to them.
During the financial 2021-22, banks were set a target of Rs 2,49,138 crore of which actual lending was to the tune of Rs 2,37,076 — a healthy 95 per cent of the target. This was a massive rise as compared to the fiscal of 2020-21 when of the Rs 2,48,489 crore, banks could only report lending of Rs 15,77,575 crore — 63 per cent of the target.
Even in the sector, lending to the micro units, which always lagged, was good with banks exceeding their target and lending 109 per cent to them. Lending to medium and small scale was 80 and 173 per cent of their targets respectively.
Lottery Box-India’s most professional lottery interactive community.