Growth in credit to MSME sector slows to 17.4 pc in Oct

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SME Times News Bureau | 07 Dec, 2011
Growth in offtake by the micro, small and medium enterprise (MSME) sector slowed to 17.4 percent at Rs4.73 lakh crore in October, reports a leading news agency. Bank credit disbursement to the MSME sector had increased by 20 percent in October last year.

However, agency reports that bank lending to the priority sector grew at a mere 10 percent in October this year, on an annual basis, on account of lower offtake by agriculture and MSME segments as well as decline in micro credit.

Credit offtake by the priority sector had grown by 19.9 percent during the same month of 2010.

Credit disbursement to the priority sector stood at Rs12.48 lakh crore in October compared to Rs11.35 lakh crore in the same month last year, according to the Reserve Bank of India (RBI).

In October, bank disbursements to agriculture and allied activities went up by a mere 7.1 percent to Rs4.35 lakh crore. In October 2010 credit disbursement to the segment had gone up by 20.4 percent on an annual basis.

As far as micro credit is concerned, the sector, in fact, witnessed a decline of 13.3 percent during the month under review to Rs24,601 crore. Micro credit had grown by over 50 percent in the same month last year.

Credit to the housing sector in October this year stood at Rs2.36 lakh crore, up a meagre 3.5 percent on an annual basis. The growth in credit to housing had stood at 9.3 percent in October 2010.

Bank credit disbursement to weaker sections grew by 13.3 percent to Rs2.20 lakh crore during the month under review.

Credit offtake by weaker sections from banks had risen at an annual rate of 27.7 percent in October last year.

While some priority sectors like agriculture and loans for weaker sections is disbursed at an interest rate lower than their prime lending rates, other segments do not fall under the subsidised lending regime.