Credit for growth

Flow of credit can improve MSME performance

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The recently held National MSME Cluster Outreach Programme saw Union Finance Minister Nirmala Sitharaman announce measures to support micro, small, and medium enterprises (MSMEs).

The government increased the lending target for scheduled commercial banks and non-banking financial companies (NBFCs) to MSMEs this financial year by ₹1.54 trillion, aiming for a credit flow of ₹5.75 trillion in 2024-25. This target has since risen to ₹6.21 trillion and ₹7 trillion for 2025-26 and 2026-27, respectively.

Public-sector banks (PSBs) are expected to lead in lending to MSMEs due to the growth in outstanding loans for PSBs being only 9.2 per cent over the last two financial years, while private banks and NBFCs saw much higher growth at 25 per cent and 39 per cent, respectively.