Credit demand by MSMEs has increased to near pre-pandemic level in June 2021, recovering after a drop in loan enquiries in April and May due to second wave of Covid-19 infections, according to CIBIL-SIDBI data.
The reading on index of credit enquiries fell from 139 in March 2021 to 67 in April 2021 before inching up to 75 in May 2021. It moved up to 95 in June 2021.
Lockdowns in cites to slow down Covid-19 in June led to a bounce back in credit demand (measured as credit enquiries) by MSMEs.
Also helped by government guarantee cover, lenders disbursed Rs 9.5 trillion as credit to MSMEs in the financial year ended March 2021 (Fy21), up from Rs 6.8 trillion in previous financial year (Fy20).
MSME lending in 2021 was helped by the government’s Emergency Credit Line Guarantee Scheme (ECLGS), which provided 100 per cent credit guarantee to lenders.
The non-performing assets (NPA) rates for MSME portfolios are stable due to high credit growth. With the strong inflow of credit in the MSME sector, and various support measures from government and regulator. The NPA rates for MSMEs are at 12.5 per cent for March 21, compared to 12.6 per cent for March 2020.
However, the NPA rates for March 2021 are higher than December 2020 ( at 12 per cent ) coupled with credit downgrades, said CIBIL.
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