MSMEs' non-performing loans remain high in Gujarat in Q2FY18

The sector saw a marginal fall in NPAs compared to the preceding quarter of April-June 2017 when it posted a figure of Rs 75.030 bn

Coinciding with the rollout of the goods and services tax (GST) in July 2017, the second quarter of July-September 2017 in the current financial year saw non-performing assets (NPAs) for micro, small and medium enterprises (MSMEs) remain high.

The State Level Bankers' Committee (SLBC) data show that the July-September advances to MSMEs in Gujarat have seen the highest NPAs of Rs 63.210 billion, or 7.02 per cent of total advances. The sector, however, saw a marginal fall in NPAs compared to the preceding quarter of April-June 2017 when it posted a figure of Rs 75.030 billion, or 8.55 per cent of total advances worth Rs 877.35 billion to the sector.

This is despite overall NPAs in Gujarat falling from Rs 353.420 billion, or 7.4 per cent of total advances worth Rs 4,774.800 billion, in the April-June quarter to Rs 313.180 billion, or 6.39 per cent of Rs 4,898.330 billion.

According to the SLBC, the overall slippage in NPAs is on the back of enhanced efforts by banks in the recovery process.

On the other hand, led by GST, credit offtake also picked up in the second quarter of financial year 2017-18. The year-on-year growth in Q2 for advances was 9.15 per cent when compared to the corresponding quarter last year, as against 8.80 per cent in the preceding first quarter of the current financial year.

However, growth in advances to the MSME sector when compared to the corresponding quarter last year also fell from 10.13 per cent in the April-June 2017 quarter to 8.76 per cent in the July-September 2017 quarter. Total advances to MSMEs stood at Rs 900.460 billion in the second quarter of this year, which was 19.57 per cent of total advances.

According to SLBC, the advances scenario has been improving since then with businesses having begun to stabilise after GST implementation.

Meanwhile, deposits in Gujarat grew by 11.28 per cent in the July-September 2017 quarter to stand at Rs 6,317.380 billion, as against Rs 5,677 billion in the said quarter last year.