Loans to small businesses in the industries segment shrank to ₹4.52 trillion as of 22 May, from ₹4.87 trillion as on 27 March
Mumbai: At a time when the government is pushing credit under its ₹3-trillion guaranteed loan programme, outstanding loans to micro, small and medium industries shrank by ₹34,627 crore in two months of the complete lockdown.
This is according to the latest dis-aggregated credit data released by the Reserve Bank of India (RBI). Presented in the form of sector-wise credit data, this showed loans to small businesses in the industries segment shrank to ₹4.52 trillion as of 22 May, from ₹4.87 trillion as on 27 March. This is a 7.1% decline in outstanding credit to this segment.
Since banks started working on the guaranteed credit scheme from 1 June, details on the disbursal will not reflect in this data. However, the data shows how even after banks launched their own covid-19 emergency credit lines after the lockdown, it did not alter their existing risk-averse sentiment towards small businesses.
This data does not include all small businesses engaged in services. While outstanding bank loans to all services shrank 2% in the same period to ₹25.43 trillion, the central bank does not give a break up of how much of it is to micro, small and medium enterprises (MSMEs).
The problem, as Mint reported on 28 June, is that while borrowers are lining up for increasing their limits through fresh loan sanctions, many remain reluctant to actually draw fresh funds.
“They are waiting it out to see whether they need the money. In fact, a large number of people said that please sanction me the extra credit, but I do not need the money. There is a great amount of uncertainty and hopefully July and August will help us understand how it will play out," C S Setty, managing director, State Bank of India (SBI) had said last week.
That apart, loans to other segments like retail and priority have also declined between 27 March and 22 May, showed RBI data. While total retail loans have shrunk by 2.9%, priority sector advances fell 3.5% in the same period.
The decline in retail loans was led by a 2.7% decline in auto loans, a 3.6% fall in other personal loans and a 20% fall in advances against fixed deposits, albeit off a low base.