Crisil SME Tracker: NPA resolution key to growth in bank lending to MSEs

CRISIL analysed NPA trend in MSE priority sector loans of top 5 public and private sector bank

Growth in credit to micro and small enterprises (MSEs) in the manufacturing sector plunged to -2.2 per cent and -0.5 per cent in fiscals 2016 and 2017, respectively, compared with 23.7 per cent and eight per cent in 2014 and 2015. The sharp contraction came as non-performing assets (NPAs) in the MSE segment started rising, which compounded the corporate stressed assets problem for banks, even as investment demand remained weak.

CRISIL analysed the NPA trend in MSE priority sector loans of the top five public and private sector banks. Between fiscals 2014 and 2017, average gross NPAs more than doubled from