PSBs disburse over INR 13 Trillion to MSMEs in Q2 FY25; SBI leads in credit share, ET BFSI

In Q2 FY25, Public Sector Banks (PSBs) disbursed over INR 13,12,731.24 Cr in loans, as per the data released by banks during their Q2 earnings call. State Bank of India (SBI), country’s largest public sector lender took the lead, extending a massive INR 4.56 trillion in credit to MSMEs.

Public Sector Banks (PSBs) play a critical role in lending to MSMEs, often guided by government mandates and priority sector lending (PSL) norms. Under PSL requirements, banks must allocate 40% of their net credit to specified sectors, with a significant share earmarked for MSMEs.

Here’s a closer look at how various PSBs have contributed to the MSME credit disbursal in Q2 FY25:

SBI dominates the market share

State Bank of India, the largest lender in the public sector, has maintained its dominance in MSME credit disbursements. In Q2 FY25, SBI extended a credit of INR 4,56,491 crore, an increase of 17.36% compared to INR 3,88,974 crore in Q2 FY24.

SBI’s NPAs in the MSME sector stood at INR 16,584 crore in Q2 FY25, slightly improved from INR 17,169 crore in Q2 FY24, which signals the bank’s effective risk management measures.

Bank of Baroda, for instance, extended INR 1,26,828 crore in Q2 FY25, marking a 5.7% increase from Q1 FY25’s INR 1,19,940 crore and an 11.7% year-on-year increase from INR 1,13,512 crore in Q2 FY24.

In terms of Non-Performing Assets, Bank of Baroda’s NPAs stood at INR 10,893 crore for Q1 FY25, compared to INR 11,037 crore in Q2 FY24, indicating better control of defaults. The bank’s MSME slippages were INR 1,156 crore in Q2 FY25, down slightly from INR 1,206 crore in the previous quarter.

Canara Bank, another significant player in the MSME sector, disbursed INR 1,39,103 crore in Q2 FY25, compared to INR 1,35,062 crore in Q1 FY25, a growth of 2.99% quarter-on-quarter and 5.55% year-on-year from INR 1,31,787 crore in Q2 FY24. NPAs for Canara Bank stood at INR 10,713 crore, compared to INR 11,365 crore in Q1 FY25 and INR 12,076 crore in Q2 FY24, showing continued improvements in asset quality.

Punjab National Bank also demonstrated a 5.7% quarter-on-quarter increase in MSME credit disbursal to INR 151,071 crore in Q2 FY25. On a year-on-year basis, the bank’s credit extension increased by 8.9%. Despite this growth, NPAs in the MSME sector stood at INR 19,012 crore in Q2 FY25, compared to INR 22,631 crore in Q2 FY24.

Bank of Maharashtra disbursed INR 45,031 crore to MSMEs in Q2 FY25, marking the highest year-on-year growth of 24.96%. Of this, INR 22,512 crore went to micro enterprises, INR 14,813 crore to small enterprises, and INR 7,706 crore to medium enterprises, a 126.72% increase compared to Q2 FY24.

Public Sector Bank MSME Credit (INR Crore)
State Bank of India 4,56,491
Bank of Baroda 1,26,828
Canara Bank 1,39,103
Punjab National Bank 1,51,071
Bank of Maharashtra 45,031
Bank of India 85,097
Indian Bank 86,729
Central Bank of India 55,552
Union Bank of India
1,40,836
UCO Bank 647.24
Indian Overseas Bank 8,828
Punjab & Sind Bank 16,518

How did Private Banks contribute?

While PSBs have led the way, private sector banks have also made significant contributions to the MSME credit landscape. ICICI Bank and Axis Bank, for example, reported growth in their MSME portfolios. ICICI Bank’s business banking portfolio grew by 30% year-on-year, with INR 2,330.25 crore disbursed to MSMEs in Q2 FY25, up from INR 1,793.12 crore in Q2 FY24.

ICICI’s Business Banking portfolio comprises borrowers with turnover of upto INR 7.50 bn and incorporates business banking, SME, midcorporate, rural business credit and dealer funding portfolios earlier reported separately/ grouped under other portfolios.

Axis Bank disbursed INR 1,10,474 crore in Q2 FY25, compared to INR 94,845 crore in Q2 FY24, marking a solid year-on-year increase. Axis Bank’s MSME loan book grew nearly twice as fast as its overall loan book, contributing to its overall growth trajectory. With a market share of 8.7% in MSME credit, Axis Bank has solidified its presence in this segment.

Kotak Mahindra Bank, the fourth-largest private sector bank, increased its MSME lending by 31% year-on-year, disbursing INR 32,174 crore in Q2 FY25 compared to INR 24,569 crore in Q2 FY24.

Private Sector Bank MSME Credit Disbursed (INR Crore)
ICICI Bank 2,330.25 (Business Banking)
Axis Bank 1,10,474
Kotak Mahindra Bank 32,174
IndusInd Bank 32,723
IDBI Bank 27,901
Yes Bank 38,982

Non Performing Assets

Indian Bank, which extended INR 86,729 crore in credit to MSMEs in Q2 FY25 (an 8% increase year-on-year), saw a slight reduction in its NPAs from INR 9,691 crore in Q2 FY24 to INR 7,602 crore in Q2 FY25, reflecting improved asset quality. Similarly, UCO Bank and Bank of India reported stable NPAs, demonstrating a more cautious approach toward MSME lending while continuing to grow their portfolios.

  • Published On Nov 18, 2024 at 08:00 AM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETBFSI App

  • Get Realtime updates
  • Save your favourite articles


Scan to download App


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *