Finance Ministry said the various initiatives taken by the government has started yielding results with loans to the sector witnessing a growth of 20 per cent, reported PTI. "MSME initiatives start yielding results! Credit to Micro sector up 20% YoY; MUDRA loans contribute to offtake; PSB share in first time borrowers 79%. Transformational shift underway!," Financial Services Secretary Rajiv Kumar said in a tweet. First time borrowers increased 4 lakh and the public sector bank contribution was 79 per cent, he said. Loans to small business in the sub-Rs 10 lakh category registered a growth of 32 per cent, he said.
MSMEs with loan between Rs 10 lakh to Rs 5 crore have the lowest deliquency rate, he said, adding, these are relatively stable with limited downside. The government has taken a slew of measures, including tax concessions in the budget, for micro, small and medium enterprises (MSMEs) with an annual turnover of up to Rs 250 crore and lowering of the interest burden. The RBI on its part too announced various measures for MSMEs hit by the implementation of Goods and Services Tax (GST) by giving them additional up to 180 days to clear their dues to banks.
As part of alignment with the new taxation regime, the Union Cabinet last month also approved the change in criteria for classifying MSMEs from 'Investment in Plant & Machinery' to annual turnover. As per the new classification, enterprises having annual turnover of less than or equal to Rs 5 crore fall under the 'micro' category. Units having turnover between Rs 5 crore to Rs 75 crore will be classified as small enterprises, whereas those having turnover between Rs 75 crore and Rs 250 crore will be classified as enterprises.