Pvt banks more than triple their share in loans sanctioned to MSMEs – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/banking/finance/banking/pvt-banks-more-than-triple-their-share-in-loans-sanctioned-to-msmes/articleshow/92484518.cms

Synopsis

Many private sector banks started cutting their exposure to small businesses when the pandemic broke out but with govt guarantees coming in and stress turning out to be less than expected, they sharply increased their market share in FY22.

Data shows that private sector banks in India more than tripled their share in loans sanctioned to small businesses in India in FY22. Public sector banks increased their share to 73% in FY21. When competition for credit picked up in FY22, the are of public banks lending to small segments dropped to 19.1%.

Private sector banks’ share in loans sanctioned to small and medium enterprise (MSME) sector to 69.8% in FY22 on an annual basis.

Many private sector banks started cutting their exposure to small businesses when the pandemic broke out but with government guarantees coming in and stress turning out to be less than expected, they sharply increased their market share in FY22.

During the pandemic, the government increased credit to small firms by guaranteeing new risks through the Emergency Credit Line Guarantee Scheme (ECLGS).

Large corporates, who have historically been the primary consumers of bank credit, deleveraged in the post-pandemic period by repaying debts and holding back on borrowings.

According to the CRIF High Mark report, the total active loans for the MSME industry was at 137.4 lakh accounts as of March 2022, a 7 percent increase over March last year and a 43 percent increase over March 2020.

In FY22, the top five districts of Mumbai, Mumbai Suburban, Chennai, Kolkata, and Bengaluru accounted for 56% of total origination value.

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