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Banks in Kerala have reported a notable increase in disbursements to Micro, Small, and Medium Enterprises (MSMEs) during the financial year 2023-24, according to the latest data released by the State Level Bankers’ Committee (SLBC). The total disbursement has surged 26.45 per cent, reflecting “a strong commitment to fostering local businesses and supporting economic growth”.
The SLBC assessed integration of digital banking solutions, streamlined loan disbursement, and reducing the time and paperwork required for MSMEs to obtain funding. “We believe this upward trend in funding is crucial for the economic development of the state. Overall, the MSME loan outstanding as on March 2024 is ₹80,210 crore, against ₹68,452 crore in the previous year,” it said.
Significant contribution
MSMEs contribute significantly to employment generation and are the backbone of the local economy, especially in rural and semi-urban areas. An estimated 30.57 per cent of the total credit in the MSME portfolio has gone to the manufacturing sector. This is on the year-on-year increase, which is a healthy sign for the economy of the state at large, the SLBC added.
Cumulative disbursement reached ₹59,731 crore, up from ₹46,907 crore in the previous financial year. This points to the revival of the economy after the Covid pandemic, driven by a combination of factors, including enhanced credit schemes, reduced interest rates, and roll-out of government-backed initiatives at both the state and Central levels.
Facilitating factors
Key facilitating factors identified in this context include pro-active lending policies adopted by banks. They are more flexible and supportive -- for instance, in terms of simplified application processes and quicker loan approvals -- providing easier access to credit. Schemes such as One-Lakh Enterprises, Mission-1000, Pradhan Mantri Mudra Yojana, and the Credit Guarantee Fund Trust for MSMEs have provided financial backing and confidence to both banks and MSMEs.
Banks hope to maintain the focus on MSMEs, supported by innovative financial products and services tailored to their needs. The State government is also set to launch more initiatives to sustain growth and stability in the sector. An increase in disbursements during 2024-25 signals the banks’ commitment to help bolster the economy by empowering small businesses, the SLBC said.
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