Lok Sabha Question No. 3935 (UNSTARRED), answered on 2019-12-12
Subject: Flow of Loans to MSME Sector
Ministry: MICRO,SMALL AND MEDIUM ENTERPRISES
Asked by: Lavu Sri Krishna Devarayalu

## GOVERNMENT OF INDIA

## MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 3935 TO BE ANSWERED ON: 12.12.2019

## FLOW OF LOANS TO MSME SECTOR

## 3935.         SHRI LAVU SRI KRISHNA DEVARAYALU:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a) Whether as per a report 'Credit Disrupted: Digital MSME Lending in India by Omidyar Network and Boston Consulting Group, nearly 40% of our Micro, Small and Medium Enterprises (MSMEs) are compelled to borrow from informal sources where interest rate is 2.5 times higher than the formal sources of lending and if so, the details thereof;
- (b) The  details  of  loans  disbursed  by  banks  and  other  financial  institutions  to MSMEs during each of the last five years and the current year, State/sector-wise;
- (c) Whether any target has been set by the Ministry  as  is  being  done  in  case  of agriculture sector for disbursement of loans and if so, the details thereof;
- (d) Whether the Ministry has brought / proposed to bring any policy changes for easy flow of loans to MSME sector and if so, the details thereof and the steps taken by the Government in this regard; and
- (e) The details of employment opportunities created by MSME sector during the above said period sector-wise?

## ANSWER

## MINISTER OF MICRO, SMALL AND MEDIUM ENTERPRISES (SHRI NITIN GADKARI)

(a) to (d): As reported by RBI, the details of outstanding credit given for MSME sector  by  Public  Sector  Banks  are  provided  in  Annexure.  Rest  of  the  credit  comes from  Private  Banks,  NBFCs,  Regional  Rural  Banks,  Cooperative  Banks,  Fintech Companies and informal sources of finance.

A  number  of  steps  have  been  taken  to  facilitate  effective  credit  services  to MSMEs including inter-alia the following:

- i) Under Credit Guarantee Scheme in the FY 2018-19, 4,35,520 proposals have been approved with guarantee coverage of Rs. 30168.57 crore.
2. ii) 2% interest subvention for MSMEs for loan upto Rs. 1 crore for the financial year 2018-19 (w.e.f. 02.11.2018) and 2019-20.
3. iii) Reserve  Bank  of  India (RBI)  has  issued  Framework  for  Revival  and Rehabilitation of MSMEs having loan limits up to ₹25 crore on 17.03.2016.
4. iv) RBI has permitted one-time restructuring of existing loans to stressed MSME units  which  are  classified  as  'standard'  without  a  downgrade  in  asset classification vide circular dated 01.01.2019.

- v) Collateral  free  loans  up  to  Rs.  10  lakh  for  units  in  the  Micro  and  Small Enterprises (MSE) sector.
2. vi) MSME loans, including service  sector  MSMEs,  classified  as  priority  sector lending.
3. vii) Implementation of Trade Receivables Discounting  System  (TReDS)  to resolve  the  problem  of  delayed  payments  to  MSMEs  and  classification  of factoring transactions as Priority Sector Lending.
4. viii) Target  of  7.5  percent  of  Adjusted  Net  Bank  Credit  (ANBC),  or  Credit Equivalent  Amount  of  Off-Balance  Sheet  Exposure,  whichever  is  higher, fixed for Scheduled Commercial  Banks  (SCBs)  for lending to Micro Enterprises.
5. ix) Calculation  of  working  capital  requirement  up  to  Rs.  5  crore  of  MSEs simplified by defining it as 20% of projected annual turnover.
- x) Banks advised to mandatorily acknowledge MSME loan applications and put in place system for their online tracking.
7. xi) RBI has advised banks to streamline flow of credit to MSEs for facilitating timely and adequate credit flow during their 'Life Cycle'.

Besides  this,  Ministry  of  MSME  has  taken  several  initiatives  to  encourage Micro, Small and Medium Enterprises, which  include the schemes/programmes such as Prime Minister's Employment Generation Programme (PMEGP), Scheme of Fund for  Regeneration  of  Traditional  Industries  (SFURTI),  A  Scheme  for  Promoting Innovation, Rural Industry and Entrepreneurship (ASPIRE), Credit Guarantee Scheme (CGTMSE), Credit linked Capital Subsidy-Technology Upgradation Scheme (CLCSTUS),  Micro  &  Small  Enterprises-  Cluster  Development  Programme  (MSE-CDP), National  Scheduled  Caste  and  Scheduled  Tribe  Hub  (NSSH),  Procurement  and Marketing Schemes (PMS) etc. National Small Industries Corporation (NSIC) under the Ministry of MSME  also  provides  integrated support  services  to  MSMEs encompassing marketing, finance, technology and other services.

(e): Under  the  Prime  Minister's  Employment  Generation  Programme  (PMEGP), the estimated employment generated (number of persons) in micro enterprises during the years 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 has been 3.6 lakh, 3.2 lakh, 4.08 lakh, 3.87 lakh and 5.87 lakh, respectively. Employment opportunities have also been created under Pradhan Mantri MUDRA Yojana and other promotional schemes of different Ministries of Government of India & State Governments.

****

Outstanding Credit to Micro, Small and Medium Enterprises by Scheduled Commercial Banks

(No. of A/c in lakh, Amt. O/s in ₹ crore)

| Sr. No   | State               | As on March 31, 2016   | As on March 31, 2016   | As on March 31, 2017   | As on March 31, 2017   | As on March 31, 2018   | As on March 31, 2018   | As on March 31, 2019   | As on March 31, 2019   |
|----------|---------------------|------------------------|------------------------|------------------------|------------------------|------------------------|------------------------|------------------------|------------------------|
| Sr. No   | State               | No. of A/cs            | Amt O/s                | No. of A/cs            | Amt O/s                | No. of A/cs            | Amt O/s                | No. of A/cs            | Amt O/s                |
| 1        | Andamans            | 0.09                   | 517.12                 | 0.08                   | 534.61                 | 0.08                   | 599.58                 | 0.08                   | 688.05                 |
| 2        | Andhra Pradesh      | 9.19                   | 40840.41               | 9.57                   | 44447.24               | 9.95                   | 49610.86               | 10.52                  | 56607.02               |
| 3        | Arunachal Pradesh   | 0.10                   | 580.26                 | 0.10                   | 648.29                 | 0.10                   | 702.27                 | 0.17                   | 802.74                 |
| 4        | Assam               | 6.14                   | 11680.23               | 8.59                   | 13066.16               | 9.94                   | 15372.27               | 14.46                  | 18880.27               |
| 5        | Bihar               | 7.36                   | 16754.32               | 8.55                   | 19364.61               | 12.71                  | 22388.88               | 17.50                  | 27736.26               |
| 6        | Chandigarh          | 0.37                   | 9582.11                | 0.43                   | 10021.53               | 0.42                   | 8846.18                | 0.67                   | 10538.07               |
| 7        | Chhattisgarh        | 3.32                   | 16221.14               | 4.17                   | 18246.88               | 4.57                   | 19231.49               | 5.30                   | 23229.65               |
| 8        | Dadra& Nagar Haveli | 0.04                   | 503.63                 | 0.05                   | 572.01                 | 0.06                   | 658.75                 | 0.07                   | 842.33                 |
| 9        | Daman &Diu          | 0.03                   | 415.98                 | 0.03                   | 8.59                   | 0.03                   | 543.15                 | 0.15                   | 4132.58                |
| 10       | Delhi               | 4.12                   | 106755.95              | 4.58                   | 103780.41              | 4.20                   | 99502.74               | 4.88                   | 102884.08              |
| 11       | Goa                 | 0.60                   | 4520.77                | 0.73                   | 4714.53                | 0.79                   | 5021.80                | 0.79                   | 5018.20                |
| 12       | Gujarat             | 9.11                   | 83927.70               | 10.08                  | 94600.09               | 11.30                  | 98059.32               | 12.60                  | 119505.50              |
| 13       | Haryana             | 4.21                   | 42573.23               | 4.97                   | 42947.13               | 5.66                   | 45195.50               | 6.70                   | 54908.77               |
| 14       | Himachal Pradesh    | 1.08                   | 6749.07                | 1.18                   | 7102.73                | 1.26                   | 7449.94                | 1.31                   | 8074.65                |
| 15       | Jammu& Kashmir      | 2.36                   | 9207.83                | 2.61                   | 10144.40               | 2.78                   | 12084.42               | 2.92                   | 13871.92               |
| 16       | Jharkhand           | 4.17                   | 15437.01               | 4.80                   | 16317.03               | 5.76                   | 17953.95               | 8.61                   | 20186.07               |
| 17       | Karnataka           | 13.40                  | 78751.39               | 15.91                  | 82371.15               | 17.83                  | 79982.85               | 20.90                  | 89094.96               |
| 18       | Kerala              | 7.37                   | 45615.86               | 8.74                   | 46513.71               | 10.60                  | 48359.03               | 12.59                  | 53146.38               |
| 19       | Lakshadweep         | 0.02                   | 83.96                  | 0.02                   | 16.60                  | 0.01                   | 15.63                  | 0.01                   | 18.47                  |
| 20       | Madhya Pradesh      | 10.08                  | 38674.77               | 11.65                  | 41452.04               | 13.84                  | 45403.04               | 17.29                  | 52800.57               |
| 21       | Maharashtra         | 27.02                  | 227178.41              | 27.97                  | 250605.29              | 27.50                  | 235191.58              | 30.89                  | 262887.01              |
| 22       | Manipur             | 0.16                   | 509.15                 | 0.19                   | 583.38                 | 0.34                   | 745.91                 | 0.57                   | 973.31                 |
| 23       | Meghalaya           | 0.25                   | 893.11                 | 0.32                   | 890.00                 | 0.31                   | 905.05                 | 0.39                   | 1053.48                |
| 24       | Mizoram             | 0.08                   | 394.07                 | 0.09                   | 410.73                 | 1.97                   | 810.22                 | 0.17                   | 578.33                 |
| 25       | Nagaland            | 0.10                   | 559.16                 | 0.15                   | 678.56                 | 0.19                   | 710.53                 | 0.26                   | 690.91                 |
| 26       | Orissa              | 6.62                   | 20974.86               | 7.85                   | 24450.12               | 8.27                   | 25778.04               | 14.38                  | 31449.27               |
| 27       | Puducherry          | 0.57                   | 2485.00                | 0.69                   | 2546.03                | 1.03                   | 2639.12                | 1.16                   | 2924.06                |
| 28       | Punjab              | 5.51                   | 45841.76               | 6.18                   | 45733.00               | 6.63                   | 46439.69               | 8.27                   | 54134.66               |
| 29       | Rajasthan           | 7.62                   | 48550.57               | 8.79                   | 52885.67               | 10.00                  | 58000.43               | 11.81                  | 70412.30               |
| 30       | Sikkim              | 0.14                   | 482.08                 | 0.20                   | 549.96                 | 0.19                   | 516.20                 | 1.62                   | 1067.98                |
| 31       | Tamil Nadu          | 22.71                  | 139221.94              | 27.54                  | 145119.87              | 34.50                  | 151904.46              | 35.06                  | 165455.58              |
| 32       | Telangana           | 5.38                   | 45354.30               | 5.87                   | 50778.43               | 5.60                   | 53170.15               | 6.22                   | 55848.81               |
| 33       | Tripura             | 1.16                   | 1704.61                | 1.72                   | 1861.81                | 2.10                   | 2274.25                | 2.73                   | 2595.59                |
| 34       | Uttarakhand         | 3.12                   | 16216.61 69988.57      | 2.34 17.13             | 11278.25               | 4.89                   | 26979.77               | 3.90                   | 26474.71               |
| 35       | Uttar Pradesh       | 14.00                  |                        |                        | 79224.49               | 17.03                  | 72614.51               | 24.90                  | 90201.48               |
|          | Total               | 205.11                 |                        | 233.62                 |                        | 261.54                 | 1324239.34             | 320.68                 | 1510650.52             |
|          |                     |                        | 1216007.11             |                        | 1296398.82             |                        |                        |                        |                        |