Bank Credit to MSMEs Soars 13.9% in Oct: RBI Data

Bank credit to Micro, Small, and Medium Enterprises (MSMEs) under priority sector lending saw a significant rise of 13.9% in October, reaching Rs 26.34 lakh crore, up from Rs 23.11 lakh crore in the same month last year, according to the latest data from the Reserve Bank of India (RBI).

This surge highlights the growing financial support to MSMEs, which now account for 15.7% of India’s total non-food credit of Rs 167 lakh crore, a slight increase from 15.5% in October 2023.

Within the MSME sector, priority credit to micro and small enterprises (MSEs) grew by 12.3%, reaching Rs 20.76 lakh crore, up from Rs 18.49 lakh crore in October 2023. Credit to medium enterprises saw a substantial jump of 20.8%, rising to Rs 5.57 lakh crore from Rs 4.61 lakh crore.

Finance Minister Nirmala Sitharaman, in November, highlighted the government’s efforts to support MSMEs by announcing a Rs 100 crore credit guarantee scheme for the sector, which is expected to be presented for Cabinet approval soon. Once approved, the scheme will provide guarantees through the MSME Ministry and partnering banks.

Additionally, Sitharaman set ambitious lending targets for the banking sector, urging banks to extend Rs 6.12 lakh crore to MSMEs in the financial year 2025-26 and Rs 7 lakh crore in FY27.

RBI Deputy Governor Swaminathan J also stressed the importance of MSMEs formalizing their businesses and maintaining credit discipline to improve access to finance and strengthen their financial health.