Loan disbursement to MSME sector increased by 182% compared to pre-pandemic period: report

Driven by increased lending by private sector banks, lending to the MSME sector increased by 182% in FY22 to Rs 37 trillion from pre-covid levels , according to a study by credit bureau CRIF High Mark. The market share of private bank loans to MSMEs, both in value and volume, has increased at the expense of public sector banks.

In terms of value, loan disbursement by private banks increased from 33.6% in FY20 to 69.8% in FY22. Private banks’ share increased from 26.9 % in FY20 to 33.5% in FY22 by volume.

The average amount of loans to MSMEs increased to Rs 72.4 lakhs from Rs 37.7 lakhs in FY20, translating to an increase of 92%. For private banks, the average ticket size increased from Rs 47.1 lakh in FY20 to Rs 150.5 lakh in FY22. The average note size for public sector banks in FY22 was Rs 28.6 lakh and that of NBFCs was Rs 32.1 lakh.

Geographically, the top 3 states of Maharashtra, Tamil Nadu and Delhi account for 64% of the total value of creations in FY22, according to the report. According to departure volume, Maharashtra, Tamil Nadu and Uttar Pradesh are the top 3 states and with an average ticket size of Rs 256.5 lakh in FY22. Maharashtra has the largest wallet loans to MSMEs.

Of the total creations in FY22, 75% came from the top 25 districts. The top 5 districts are Mumbai, Mumbai Suburban, Chennai, Kolkata and Bangalore, accounting for approximately 56% of the total value of creations in FY22. In terms of original volume, the top 5 districts in FY22 22 were Bengaluru, Mumbai, Pune, Ahmedabad and Lucknow.