Loans to MSMEs are shrinking despite credit guarantees1 min read . Updated: 04 Sep 2020, 10:37 AM IST
- RBI data shows that as of July, loans to MSMEs had shrunk 4.96% year-on-year
- Despite ₹1 trillion of credit disbursals to MSMEs up to August, the overall credit flow is still a trickle
India’s policymakers wish to reduce the economy’s pain through credit targeted specifically towards small businesses that contribute roughly 25% to the gross domestic product (GDP). The government’s credit guarantee schemes, and the forbearance measures by the Reserve Bank of India (RBI) are all to push lenders to increase cheaper credit to micro, small and medium enterprises (MSME).
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