Access to credit is one of the most contentious topics among MSMEs. Many times one hears MSMEs whine about lack of credit from banks and financial institutions and of them being risk averse.
Banks on the other hand cite unviable projects, lack of awareness of schemes as some reasons for not being able to lend to MSMEs in certain cases.
Albeit there is a bit of truth in both it is quite evident that MSMEs need banks/credit institutions and so do banks and FIs need MSMEs to grow their book.
As per some banks and FIs Vizag Industrial Scan spoke to said that they are seeing a revival in credit uptake from MSMEs in this region.
Credit uptake is the demand level for credit facility from a financial institution. To put it in simpler terms businesses are now looking to borrow money either for expansion or for new projects.
‘The overall credit off-take for the first quarter was very muted in MSMEs and there was very low growth. However in the 2nd quarter it has improved and we can hope of a 10 to 15 percent growth in MSME credit. In Vizag especially we are looking for better growth in Automobile, Export oriented and construction in 3rd quarter also’ said a senior banker of a major PSB (public sector bank).
Concurred another senior banker from the private sector and said that as the economy is doing well MSMEs are actively seeking for funds. ‘Credit opportunities are huge for MSMEs and what most of them are looking for is good service’ opined the banker.
Similarly the Small Industries Development Bank of India (SIDBI) has seen a surge in their MSME loan disbursement.
‘Last financial year i.e. FY 23 we disbursed a total of Rs 60 crores to micro and small firms while this financial year in the first 5 months itself we have disbursed Rs 21 crores as against Rs 9 crores we had lent out in the same period last year’ said Mr G Srinivasa Sarma, AGM & Branch In-Charge, SIDBI, Visakhapatnam speaking to Vizag Industrial Scan.
Some of the sectors seeing robust demand for credit included pharma, rice mills, spinning units, oil mills, chemical units etc. Mr Sarma said he was confident of disbursing more this fiscal year compared to the last. ‘By the end of FY 24 we should have disbursed about Rs 80-85 crores’ said the SIDBI official.
Mid-Large Corporates Slowdown
However as per a senior corporate banker there has been a considerable slowdown in the medium to large corporates asking for credit.
‘We are seeing a considerable slowdown in lending to large businesses. Their level of utilisation of their working capital limits are down by at least 40-45% said the corporate banker’.
The businesses he cited were seeing a slowdown included marine exporters and steel companies.
‘With an uncertain global economy coupled with the upcoming election period capital expenditure has been laggard. We see many businesses postponing their big projects/expansion’ said the corporate banker who lends to some of the biggest names in the corporate world in AP.
