New Delhi: Credit growth is likely to be brisk for MSMEs in FY2023-24 provided inflation remains benign and cost of credit is low, said the Economic Survey 2022-23 presented in Parliament on Tuesday. The Micro, Small and Medium Enterprises sector witnessed a credit growth of about 31 percent in January-November 2022. "If inflation declines in FY24 and if real cost of credit does not rise then credit growth is likely to be brisk in FY24," said the Survey.

'Year-on-year growth in credit since Jan-Mar quarter has moved into double digits & is rising across most sectors'

Talking about the banking sector in India, the Survey said that it has also responded in equal measure to the demand for credit as the year-on-year growth in credit since the January-March quarter of 2022 has moved into double digits and is rising across most sectors.

Bank credit growth accelerates to 16.28 pc for fortnight ended Sept 23

'Finances of PSBs have seen a significant turnaround with profit being booked at regular intervals'

The finances of public sector banks (PSBs) have seen a significant turnaround with profit being booked at regular intervals and their non-performing assets being fast-tracked for quicker resolution/liquidation by the Insolvency and Bankruptcy Board of India (IBBI), it said.

At the same time, it said, "the government has been providing adequate Budgetary support for keeping the PSBs well capitalised ensuring that their capital risk-weighted adjusted ratio (CRAR) remains comfortably above the threshold levels of adequacy."

'Financial strength has helped banks make up for lower debt financing'

Nonetheless, financial strength has helped banks make up for lower debt financing provided by corporate bonds and higher interest/ hedging costs on ECBs so far in FY'23, it said, adding, rising yields on corporate bonds and higher interest/ hedging costs on ECBs have made these instruments less attractive than the previous year.

The Survey said that the growth is expected to be brisk in FY24 as a vigorous credit disbursal and capital investment cycle is expected to unfold in India with the strengthening of the balance sheets of the corporate and banking sectors.

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