Lok Sabha Question No. 3225 (UNSTARRED), answered on 2024-12-16
Subject: Dedicated Banks for MSMEs
Ministry: FINANCE
Asked by: Shri Lavu Sri Krishna Devarayalu

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO. 3225

ANSWERED ON MONDAY, 16 th  DECEMBER, 2024/25 AGRAHAYANA, 1946 (Saka)

## DEDICATED BANKS FOR MSMEs

## 3225. SHRI LAVU SRI KRISHNA DEVARAYALU:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has any plans to establish a dedicated bank for direct lending to MSMEs and if so, the details thereof;
- (b) the total credit gap faced by MSMEs in the country during the last five years;
- (c) whether the Government proposes to transform SIDBI into a full-edged direct lending bank for MSMEs and if so, the timeline for implementation;
- (d)  tthe  current  designated  percentage  of  MSME  loans  by  RBI  under  the  Priority  Sector Lending (PSL); and
- (e) the details of the loans given by private and public sector banks to MSM

E's during the last five years, year-wise?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a): Presently, no such proposal is under consideration in this Department.
- (b): The report of Expert Committee on MSMEs, headed by Shri U K Sinha, had estimated the credit  gap  in  the  MSME  sector  in  2019  to  be  Rs.  20-25  lakh  crore.  Subsequently,  various initiatives of the Government of India and Reserve Bank of India (RBI) has facilitated flow of credit  to  MSME  sector.  Further,  as  informed  by  RBI,  the  credit  outstanding  of  Scheduled Commercial Banks (SCBs) and Non-Banking Financial Companies (NBFCs) to MSME sector
- has  increased  from  Rs.  18.48  lakh  crore  as  on  31.3.2020,  to  Rs.  31.70  lakh  crore  as  on 31.3.2024.
- (c): No such proposal is under consideration. However, SIDBI has direct lending portfolio of Rs.26,826 crore as on 31.03.2024 and it has estimated to grow to Rs. 48,700 crore by FY 202627.
- (d): As informed by Reserve Bank of India, in terms of master direction on Priority Sector Lending  (PSL)-  Targets  and  Classification  dated  4.9.2020,  all  bank  loans  to  MSMEs conforming to the conditions prescribed therein qualify for classification under priority sector lending. RBI has fixed target of 7.5 percent of Adjusted Net Bank Credit (ANBC), or Credit Equivalent  Amount  of  Off-Balance  Sheet  Exposure,  whichever  is  higher,  for  Scheduled Commercial  Banks  (SCBs) for  lending  to  Micro  Enterprises,  under  priority  sector  lending norms.
- (e): As informed by RBI, year-wise details of the loans given by private and public sector banks to MSMEs during the last five years are as below:

## Credit Outstanding to the MSME sector

(Credit o/s in Rs. Lakh crore)

| Bank Group Category   |   As on FY ended March 2020 |   As on FY ended March 2021 |   As on FY ended March 2022 |   As on FY ended March 2023 |   As on FY ended March 2024 |
|-----------------------|-----------------------------|-----------------------------|-----------------------------|-----------------------------|-----------------------------|
| Private Sector Banks  |                        6.57 |                        7.4  |                        9.39 |                       11.94 |                       14.78 |
| Public Sector Banks   |                        9.45 |                       10.01 |                        9.84 |                       10.72 |                       11.74 |

Source: RBI

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