Credit growth for micro, small and medium enterprises (MSME) in Gujarat has reported a decline during the December quarter of 2011-12, compared to the September quarter, a report from the State Level Bankers’ Committee (SLBC)-Gujarat has noted.
Industry insiders said the reason was reduced lending by banks in the wake of slow manufacturing activity and high interest rates.
The SLBC report said year-on-year credit growth in the MSME segment was 22.9 per cent during the December quarter, down from 28.64 per cent in the September quarter. However, in value terms, advances were Rs 30,362 crore during the December quarter, compared to Rs 28,980 crore in the September quarter.
“There is immense uncertainty in the market. We do not know what the Reserve Bank of India (RBI) will announce in its monetary policy review later this month. Macro economic factors are hurting. All banks are concerned about an increase in non-performing assets (NPAs),” said a senior official of a public sector bank in Ahmedabad.
Government data shows gross NPAs of public sector banks increased from Rs 68,597.09 crore in December 2010 to Rs 103,891.27 crore in December 2011. As a percentage of gross advances, NPAs increased from 2.27 per cent to 3.18 per cent.
