MSME loan portfolio expands 17.8% to Rs 64.1 trillion in FY24: Report

During the financial year 2024, a total of 27.4 million MSME loans were sanctioned, amounting to Rs 54.2 trillion. This marks a growth of 19.3% in volume and 5.4% in value

India's micro, small, and medium enterprises (MSME) loan portfolio witnessed a 17.8 per cent growth, reaching Rs 64.1 trillion by March 2024, compared to the same period last year, according to the fourth edition of CRIF High Mark's How India Lends report.

The report, accessed by The Financial Express, highlighted that MSME loans encompass credit provided to entities with an overall credit exposure of up to Rs 50 crore, as well as self-employed individuals.

The report further detailed a significant rise in loans to self-employed individuals, which surged by 28.9 per cent to Rs 35.7 trillion, while loans to MSME entities experienced a more modest increase of 6.6 per cent, reaching Rs 28.4 trillion.

Growth in MSME loans

During the financial year 2024, a total of 27.4 million MSME loans were sanctioned, amounting to Rs 54.2 trillion. This marks a growth of 19.3 per cent in volume and 5.4 per cent in value. The data showed a year-on-year (Y-o-Y) increase of 3.1 per cent in the value of originations for MSME entities, with a more robust 18.9 per cent growth in volume.

In contrast, individual MSMEs recorded a Y-o-Y growth of 12.6 per cent in the value of originations and a 19.4 per cent increase in volume during the same period.

Portfolio quality, delinquency trends

The report also noted improvements in the portfolio quality of individual MSMEs. The Portfolio at Risk (PAR) for 31-90 days dropped to 2.7 per cent by March 2024, down from 3 per cent in March 2023. Similarly, delinquency rates for PAR 91-180, PAR 181-360, and PAR 360+ improved to 1.1 per cent, 0.7 per cent, and 7.3 per cent respectively as of March 2024.

However, the MSME entity segment saw a decline in portfolio quality, with PAR 31-90 increasing to 2.5 per cent, and PAR 91-180 rising slightly to 1.1 per cent, compared to 2.1 per cent, and 1 per cent in March 2023.

Growth in microfinance loans

In addition to MSME loans, the microfinance loan portfolio also expanded significantly during FY24, registering a 26.8 per cent growth to Rs 4.4 trillion. The origination volume increased by 6 per cent, with a total of 83.5 million loans sanctioned, amounting to Rs 3.8 trillion, reflecting a 19 per cent growth.