The gross bank credit by scheduled commercial banks to MSMEs under priority sector lending norms in April 2024 grew by 18.1 per cent, according to the latest data by the Reserve Bank of India on the monthly deployment of bank credit. As of April, Rs 24.6 lakh crore was deployed to the MSME sector in comparison to Rs 20.84 lakh crore during April 2023.
Priority credit to MSMEs in April was 14.9 per cent of Rs 164.76 lakh crore in India’s non-food credit during the month.
In the MSME sector, credit to micro and small enterprises (MSEs) grew by 18.6 per cent to Rs 19.64 lakh crore during April from Rs 16.56 lakh crore in April last year. Similarly, credit to medium-sized organisations jumped by 16.5 per cent to Rs 4.98 lakh crore from Rs 4.28 lakh crore during the period.
However, growth in bank credit to MSMEs in FY25 is likely to slow down from the previous fiscal, as per a statement by the ratings agency Crisil in May this year. The slowdown is expected amid likely moderation in overall growth in bank credit by around 200 basis points (bps) to approximately 14 per cent this fiscal after an estimated robust growth of around 16 per cent in the previous fiscal.
Bank credit growth in the MSME segment is estimated at around 15 per cent in the current fiscal, down from a robust around 19 per cent in fiscal 2024.
Meanwhile, other sectors eligible for priority lending from banks such as agriculture received Rs 20.60 lakh crore in April while housing secured Rs 7.53 lakh crore. Further, education loans, renewable energy, social infrastructure, export credit saw credit of Rs 61027 crore, Rs 5712 crore, Rs 2619 crore, and Rs 13433 crore respectively.
Effective April 1, the government introduced a new clause (h) under Section 43B of the Income Tax Act with 2024-25 as the assessment year (that is financial year 2023-24), to allow expenses to buyers on invoices from micro and small enterprises only if paid within 45 days (where agreement exists) and within 15 days if there is no agreement in the year of actual payment instead of the year when it was incurred as an expense. The move has been aimed at addressing the delayed payment challenge faced by MSMEs from their buyers.
