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Private, SFB lead MLIs in loans sanctioned to micro, small units

March 16, 2023

Private, SFB lead MLIs in loans sanctioned to micro, small units
The share of private banks and small finance banks (SFBs) in the total value of Mudra loans sanctioned in the current fiscal continued to be above the share of public sector banks (PSBs) and regional rural banks (RRBs) from last fiscal, indicating the two member lending institutions (MLIs) taking the lead in extending credit support to micro and small enterprises (MSEs) among other MLIs post pandemic.

According to the data shared by the minister of state in the finance ministry Bhagwat Karad in the Lok Sabha on March 13 in a written reply to a question, private banks and SFBs had a combined share of 44.5 per cent with ₹1.56 lakh crore loans sanctioned to MSEs vis-a-vis 42.6 per cent combined share of PSBs and RRBs amounting to ₹1.49 lakh crore out of the total loans sanctioned worth ₹3.51 lakh crore as of February 28 in the current financial year. As of March 10, ₹3.54 lakh crore Mudra loans were disbursed to MSEs, according to the data from the Mudra portal.
 
Private banks and SFBs had surpassed PSBs and RRBs in the share of sanctioned loans by value in FY22. The former duo had sanctioned loans worth ₹1.46 lakh crore with a share of 43.3 per cent while the latter had sanctioned loans amounting to ₹1.24 lakh crore with a share of 36.6 per cent in the total loans sanctioned worth ₹3.39 lakh crore during the financial year.

In contrast, between FY16 with the launch of the Mudra scheme in April 2015 and FY21, PSBs and RRBs sanctioned more credit to MSEs than any other MLIs. For instance, ₹70,998 crore loans were sanctioned by PSBs and RRBs in comparison to ₹20,424 crore loans sanctioned by private banks and SFBs out of aggregate loans sanctioned worth ₹1.37 lakh crore in FY16. Similarly, in FY21, PSBS and RRBs sanctioned ₹1.30 lakh crore loans while private banks and SFBs sanctioned ₹1.12 lakh crore loans out of the total ₹3.21 lakh crore loans sanctioned.
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