Even as credit flow to MSMEs has risen, so have bad loans.
Bank credit to micro, small and medium enterprises (MSMEs) has fluctuated for most of the pandemic. It picked up in some quarters and dropped in others, based on the intensity of lockdowns. However, it has been gaining momentum in the last few quarters. Disbursements to MSMEs rose 32% in 2021-22, led by medium, small and micro enterprises in that order, according to data from TransUnion Cibil and Sidbi. That momentum has carried into 2022-23, with priority sector lending to micro and small enterprises rising 5% between this March and August, according to the Reserve Bank of India. However, it needs new pathways to unlock latent demand and potential.