MSME segments show sluggish credit growth in May

Contrary to the trend of a pick-up in industrial growth in May, credit deployment to different segments of the MSME sector remained sluggish and discouraging in the month as compared to April, 2014, the latest e-newsletter of the Federation of Indian Micro, Small and Medium Enterprises (FISME) has reported.

On a year-on-year basis, gross bank credit for micro and small enterprises increased by 23.9 per cent in April 2014. But in May, credit declined by 0.9 per cent to Rs 3,54,900 crore, from Rs 3,56,800 crore in April 2014, according to RBI data, FISME said.

Meanwhile, medium-sized enterprises showed negative growth on a YoY as well as MoM basis. On a YoY basis, the credit to the sector was -7.6 per cent, whereas on an MoM basis it was -3.2 per cent.

The services sector showed a surge in the gross bank credit by 13.6 per cent on a YoY basis. On a MoM basis however, services such as tourism, hotels and restaurants and wholesale trade showed a decline, whereas services such as transport operators, retail trade, and non-banking financial companies showed positive growth.

Priority sector lending, which also registered an impressive growth of 15.3 per cent on a YoY basis, showed a decline of 0.7 per cent in May as compared to April this year.

Under priority sector lending, micro and small enterprises manufacturing as well as services showed growth of 20.9 per cent, 23.9 per cent and 18.2 per cent respectively. But of these three, only the services sector showed positive growth this financial year.

On an MoM basis micro and small enterprises showed -2.9 per cent growth and manufacturing -7.9 per cent growth. However, the services sector showed improvement by 2.3 per cent.