MSME loan demand has touched 1.6 times the pre-pandemic levels, thanks largely to the government’s ECLGS funding, according to report by Sidbi, The Economic Times reported.
Demand for MSME — micro, small and medium enterprises — loans measured in terms of the number of enquiries has picked up in the last year, the report said.
Besides improvement in economic activity after the second wave of the pandemic, the extension of the Emergency Credit Line Guarantee Scheme (ECLGS), availability of enriched credit data and higher adoption of digital lending have enabled more MSMEs to access credit, the report said.
Loan disbursements have doubled compared to pre-pandemic levels across segments. Total disbursements amounted to ₹8 lakh crore in FY21 and ₹10. 6 lakh crore in FY22.
Disbursements in the micro segment increased by 19 percent year-on year, small enterprises by 33 percent and medium enterprises by 38 percent from FY21 to FY22.
Disbursements by the public sector and private banks increased 5 percent and 14 percent, respectively in the fourth quarter of FY22, while that by NBFCs declined 16 percent. The market share of private banks in total disbursements increased across segments.
The growth in overall MSME borrowers has moderated as lenders are focusing on extending credit to existing borrowers, the report said.