MSME suffers most during COVID, lockdown; Public sector banks have MSME NPA of Rs. 1,37,087 crore

Micro, small and medium enterprises (or MSMEs) seem to be the sector most hit by the pandemic since 2020. According to the Reserve Bank of India, gross non-performing assets of MSMEs increased by Rs. 20,000 crores from September 2020 (when it was Rs. 1,45,673) to September 2021 (when it became Rs. 1,65,732 crore), reported The Indian Express.

Interestingly, while the bad loans declined from September 2019 (8.8% of advances), to September 2020 (8.2%), they increased again in September 2021 and now account for 9.6% of the gross advances of Rs. 17.33 lakh crore.

According to the RBI, as of September 2021, Punjab National Bank had an MSME NPA of Rs 25,893 crore, State Bank of India had an MSME NPA of Rs 24,394 crore, Union Bank had an MSME NPA of Rs 22,297 crore and Canara Bank had an MSME NPA of Rs 15,299 crore. In all, the public sector banks have an MSME NPA of Rs. 1,37,087 crore.

It’s noteworthy that bad loans and NPAs have increased despite the RBI’s loan restructuring schemes, rolled out in January 2019, February 2020, August 2020 and May 2021, which granted a total loan of Rs. 1,16,332 crores to 24.51 lakh MSMEs, reported The Indian Express. Not only this, the RBI also introduced the Emergency Credit Line Guarantee Scheme, under which loans of Rs. 2.82 lakh crore have been granted till November 12, 2021.

Then how come small business owners still are in trouble? The Indian Express wrote, “This is because to be eligible under the ECLGS scheme, borrower accounts were to be less than or equal to 60 days due as on February 29, 2020.” Express also noted that credit to the MSMEs declined “by the end of September 2021 vis-a-vis March 2021”.