The MSME sector is one of the most promising sector in the Indian
market and beyond. Many businesses that were traditionally established
are slowly finding their way into the MSME sector as this sector has a
lot to offer for everyone operating within it. The Government of India
in coordination with the Ministry of MSMEs have launched variety of
schemes for the welfare of the MSMEs. The MSME businesses that have
been setup require a decent amount of capital to run their businesses
on a daily basis. Majority of the MSMEs have incurred expenses due to
maintenance, inventory and salary of the employees. There are many
other external factors like the economic drawdown that hampers the
performance of the MSME businesses and also makes their balance
sheets very heavy. It is thus suggested by all the regulatory bodies to
make sure that the MSMEs have cleaner balance sheets and are prepared
well in advance for any kind of black swan event that may occur due to
the economy or other unknown factors. The credit growth to MSME sector
has recently expanded due to many reasons.
Cashflow is an extremely important element for any kind of business. It
is important to have cash allocations for a variety of factors. Businesses
need to have money always in handy incase any emergency arises.
There are MSME schemes by the Ministry of MSMEs for the businesses
to avail credit facilities and loans in order to run their businesses.
According to SBI Ecowrap Credit growth to the Ministry of Micro, Small
& Medium Enterprises (MSME) sector has expanded by Rs 52,800 crore
in 2022-23 against degrowth of Rs 61,000 crore during the similar
period of the previous year, SBI Research said in its weekly report & SBI
Ecowrap.
Credit growth has gained traction in the recent years as well as the
previous fiscal year and has recorded 3 years high growth with a CAGR
of 13% annually. As per the mentions of the report, retail loans during
the period expanded by Rs 1.34 lakh crore against degrowth of Rs
26,500 crore last year. Each and every sector has had incremental
credit growth which is in a way extremely beneficial for the economy
and as well as for the MSME industry. There are a variety of MSME
schemes that have led to credit growth in India. There is a serious lack
of awareness regarding the variety of schemes that are readily available
for the businesses operating within the spectrum of the MSME sector.
It is important for all the stakeholders to make sure that there is
adequate flow of correct information within the ecosystem or else it
may hamper the performance of the MSMEs in the coming years.
In terms of numbers, the MSME businesses contribute almost 40% to
India’s GDP and around 45% of the manufacturing output, and
approximately 48% of the country’s exports. It is due to this very fact
that they’re so crucial to our economic development and the reason
why they’ve constantly been in the news ever since the pandemic
struck in early 2020. However, as the pandemic subsides and the
economy is slowly brought back to life, it presents a greater
opportunity for business owners to get their MSME registrations done
and avail a wide array of benefits.
Following are some of the top MSME benefits :
1.) Bank Loans.
2.) Susbsidies on registration of patents.
3.) Eligibility for Industrial Promotion Subsidy.
4.) Overdraft Interest rate exemption.
5.) Protection against delayed payments.
6.) Reimbursement of ISO compliance certification charges.
7.) Concessions on electricity bills.
The sector wise data for credit growth in recent months indicate that
there has been substantial improvement in terms of incremental credit
to each and every sector within the MSME domain. This is very positive
for the growth of the overall ecosystem. Credit growth in India touched
a fresh high at 15.3 per cent YoY as of mid of August. Deposits too
registered a YoY growth at 8.8 per cent. The retail loans segment was
the major contributor towards the growth of credit within the sector.
Retail loans constitute almost 31 per cent of the total loans. The
systemic loan growth remained robust and hit a fresh high at 15.3 per
cent YoY for the fortnight ending August (verses 14.5 per cent in the
preceding fortnight).
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Credit growth in India is slowly rising as the awareness about the
various avenues of availing credit is slowly being propagated to the
common people. There are a variety of credit requirements amongst
households and small businesses. This sector was previously very
unorganized due to the control established by few parties. The fresh set
of regulations by the Government has enabled more creditors to enter
the sector with sufficient assurance from the government and thus
serve the MSME sector to reach its ultimate potential.
The banking system in India is seeing a healthy recovery in terms of
loan growth that is essentially led by the revival of the corporate
businesses post pandemic. It is also important to note that the retail
and the MSME segments are robust at the same time. The overall
condition of the global economy is in a recessionary mood right now
due to high inflation in the US and the ongoing condition in Europe.
This has led many of the Central banks to increase the interest rates
and thus growth remains modest for now.
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Thus it is imperative that there are many benefits of MSME registration.
MSME businesses that have operated during the pandemic and are
continuing to doing so have immensely benefited due to the policies set
by the Government and the strict monitoring by the Ministry of MSME
in order to maintain the overall standards of the sector. MSME business
owners have given many testimonials about the efficient condition of