Finance Minister Boosts MSME Lending with Rs 1.5 Lakh Crore Increase in Public Sector Bank Targets for FY25

Finance Minister Nirmala Sitharaman has raised the lending target for public sector banks to micro, small, and medium enterprises (MSMEs) by nearly 35% for the current financial year, setting a new goal of Rs 5.7 lakh crore. She emphasized that no small business should be denied access to funding and called on public sector banks to lead in supporting MSME growth.

At an event in Bengaluru with bankers and MSME representatives, FM announced, “I want to add Rs 1.5 lakh crore to the lending target, bringing it to Rs 5.7 lakh crore, so MSMEs can access needed credit this year.” She encouraged banks to maintain momentum by aiming for Rs 6.1 lakh crore in the next fiscal year and Rs 7 lakh crore by FY27. She also shared plans to visit MSME clusters regularly, expecting progress updates from banks on their lending efforts.

The government has previously set ambitious lending targets in other sectors, such as agriculture, which have been met successfully. FM noted that the current loan estimate of Rs 4.2 lakh crore for FY25 is “okay but not enough” given the dominant role public sector banks play in the banking ecosystem. “PSBs should lead in MSME lending and aim for greater growth,” she said, pointing out that while PSBs are projected to lend Rs 4.2 lakh crore based on recent performance, more initiative is needed.

Despite public sector banks’ 9.2% loan growth toward MSMEs over the last two years, private banks have achieved 25% growth, and non-banking financial companies (NBFCs) have reached 39%, underscoring the need for more proactive efforts by PSBs.

FM’s remarks were made during the National MSME Cluster Programme organized by the Small Industries Development Bank of India (SIDBI) at the Indian Institute of Science, Bengaluru. Attendees included the managing directors of prominent banks like the State Bank of India, Canara Bank, and Union Bank, as well as MSME owners.

Reflecting on the pandemic period, she highlighted the extensive outreach by banks to support MSMEs, following Prime Minister Modi’s instructions to ensure their credit needs were met. Additionally, FM mentioned that the Rs 100 crore credit guarantee scheme for MSMEs, announced in this year’s budget, would soon be presented to the cabinet for approval.

Source: https://timesofindia.indiatimes.com/business/india-business/in-boost-to-msmes-fm-nirmala-sitharaman-pushes-for-rs1-5l-cr-extra-psb-loans-in-fy25/articleshow/115130020.cms