Wednesday 26th September 2018

    Why has credit growth to MSMEs slowed down in 2017!

    While micro, medium and small enterprises (MSME) are seen as critical to revive the country's economic growth, the flow of credit to these sectors has been slowing on the back of higher interest rates. According to latest data released by Reserve Bank of India (RBI), year-on-year bank credit growth to micro and small industries was 0.5% till June 23, 2017 while overall (nonfood) credit was 4.8% during the same period. Between April and June of 2017, loan growth to micro and small enterprises actually contracted by 2.2%. The scenario looks grimmer for medium enterprises. Loan growth contracted 8.1% on a year to year basis while during the April-June end period, the contraction was 4.4%. The data further shows credit to industry contracted by 1.1% in June 2017 in contrast with an increase of 0.6 per cent in June 2016. While credit growth to major sub-sectors such as infrastructure, metal, textiles, food processing contracted, it grew for sectors like construction, vehicles, vehicle parts and transport equipment. More here.

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