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The credit to MSMEs registered a growth of 13% year-on-year (YOY) at the end of November 2024 compared to 6.1% for large enterprises during the same period, noted the Survey.
“Credit growth to the services and personal loans segments also moderated to 5.9 per cent and 8.8 per cent YOY, respectively, at the end of November 2024 in the current financial year. Amongst the services sector, the moderation has been driven by a slowdown in credit disbursal to NBFCs. Vehicle and housing loans drove the moderation in the personal loans segment. In terms of increasing risk weights to non-banking financial companies (NBFCs) and credit cards, RBI’s policy interventions contributed to the moderation of credit growth in those segments,” it said.
Furthermore, the Survey talked about how the latest initiative by the Reserve Bank of India (RBI)—Unified Lending Interface (ULI)—can potentially be a game changer in MSME financing. For context, ULI was launched by the RBI to streamline the lending process. Since its pilot launch in August 2023, ULI has facilitated the disbursement of Rs 38,000 crore.
Commenting on the increase in credit to MSMEs, Sundeep Mohindru, Promoter and Director, M1xchange, said that the Economic Survey 2024-25 rightly highlights the critical role of MSMEs in driving India's economic growth. "Timely and seamless access to working capital remains a top priority for these businesses, and digital platforms like TReDS are instrumental in bridging this gap. The government's focus on financial inclusion, digitization, and supply chain resilience will further empower MSMEs, enabling them to contribute more effectively to India's GDP," added Mohindru.
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Kiran Dev, CEO, BizongoFin said the introduction of schemes like the Production Linked Incentive (PLI) across 14 key sectors and the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) in association with SIDBI, allowing MSMEs to avail loans without the need for collateral or third-party guarantees are huge enablers for growth of MSME businesses and contributing in the growth of the complete supply chain. "This is further enhanced with digital initiatives like Udyam registration, MUDRA scheme, and digital public infrastructure to support MSME transaction and credit like GEM, and ONDC," added Dev.
"But as the survey has highlighted this growth can be truly scaled up if there is more simplification and reduction in compliance requirements i.e. Single window clearances, regulations favoring transaction-backed financing coupled with a push towards digitization of transactional flow for availing credit driving traceability of the transaction. These measures will drive the efficient flow of credit at scale through digital financing solutions and lead to faster adoption of MSME adoption of technology, augmenting their growth and effective financial inclusion," noted Dev.
"Credit growth of MSMEs has been higher than large corporates, buoyed by factors like government credit guarantees and banks’ need for PSL, and an uptick in TReDs volumes. However, this “anomaly” might also be due to large corporates’ access to capital markets, which generally is their first port of call, especially for long-term funding," says Shantanu Bairagi, Chief Executive Officer of Veefin Capital.
Meanwhile, Sitharaman tabled the Economic Survey, a document outlining India’s current economic state, drafted by Chief Economic Advisor (CEA) V. Anantha Nageswaran and his team, on Friday.
