In a financial boost to the MSME sector in the state, banks in Gujarat disbursed around Rs 29,200 crore as priority sector loans to small entrepreneurs in the first six months of the financial year 2017-18. The disbursal, till the end of September, is 103 per cent of the total loans that the banks had targeted to distribute through the entire fiscal.
During the State Level Bankers’ Committee (SLBC) meeting with state government officials on Thursday, Ashwani Kumar, Chairman and Managing Director of Dena Bank said, “We have managed to disburse 103 per cent of the MSME advances by end of September… This is a very significant achievement for the banks especially when Gujarat is a hub of MSMEs and the thrust of the government is on them.”
With the MSME sector generating the maximum employment in the state, the disbursement of loans under the Priority Sector Annual Credit Plan 2017-18 was done ahead of the Gujarat Assembly elections. The districts with maximum MSME loan disbursement are Bharuch with 413 per cent of the targeted annual disbursement, followed by Porbandar with 247 per cent, Kutch with 220 per cent and Tapi with 212 per cent disbursement.
According to the SLBC report released after the meeting, the lowest disbursements happened in Botad with 19.35 per cent, Gir Somnath with 26.01 per cent and Bhavnagar with 26.31 per cent.
A total of 19 private banks and District Central Cooperative Banks (DCCBs) spearheaded the loan disbursals in the state, achieving 189 per cent and 153 per cent of their annual targets, respectively. Meanwhile, the 20 public sector banks have achieved only 89 per cent of the MSME loan disbursal target of the fiscal.
Compared to others sectors falling under priority sector lending in the state, the loan disbursement to MSME sector is much higher. For instance, only 63 per cent of the agriculture loans were disbursed at the end of September, 52 per cent of housing loans and 12 per cent of educational loans of the targeted amount during the fiscal year 207-18.
By the end of September in 2016, the same set of banks from the state had disbursed only 84 per cent (Rs 20,514 crore) of the targeted loan disbursal for MSMEs in the 2016-17 fiscal.
Despite the higher allocation of funds to the MSME sector in Gujarat, the quantum of Non-Performing Assets (NPAs) for the sector continues to remain on a higher side. At end of September 2017, the quantum of Gross NPAs in MSME sector stood at Rs 6,321 crore which is a shade more than the Rs 5,262 crore that existed during the same month, a year ago.
The Gross NPAs in Gujarat stood at Rs 31,318 crore at the end of September 2017. This is about seven per cent more (year-on-year) when compared to Rs 29,277 crore clocked in Gujarat at end of September 2016.