Fall in credit growth
Reserve Bank of India (RBI) has informed that the year-on-year growth in outstanding gross loans & advances reported by Scheduled Commercial Banks (SCBs) stood at 3.90% as on 31.12.2016 over 31.12.2015. According to Financial Stability Report of December 2016, SCBs may remain risk averse in the near future as they clean up their balance sheets and their capital position may remain insufficient to support higher credit growth. Lower credit growth of PSBs could possibly be on account of rebalancing of portfolio in the wake of impairments leading to higher credit costs including provisions, stress in certain sectors etc.
RBI has informed that the advances outstanding reported by SCBs to MSE is Rs.9,48,017 crore as on 30.09.2016 and Rs.9,45,071 crore as on 31.12.2016. Government and RBI have taken several steps to provide relief to Micro, Small and Medium Enterprises. These inter-alia, include enhanced Working Capital (WC) limits, factoring in cash deposits for determining WC limits, increase in WC limits for cashless / digital transactions, increase in coverage of loans under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) from Rs. 1 crore to Rs. 2 crore, additional period of 90 days for recognition of a loan account upto Rs.1 crore as substandard, etc