RBI Bulletin: Bank Credit Improved in June 2025 Amid Uptick in Loans to MSME

The Reserve Bank of India (RBI) in its latest bulletin highlighted that bank credit witnessed a notable improvement in June 2025, largely driven by increased lending to the Micro, Small, and Medium Enterprises (MSME) sector. This comes as a relief after months of sluggish credit growth in the industrial segment. According to the bulletin, MSMEs emerged as a key driver of credit demand, showcasing resilience despite global uncertainties. The bulletin revealed that while overall bank credit growth moderated in certain industrial categories, the MSME sector registered a double-digit surge. Economists attribute this trend to government-backed credit guarantee schemes, rising working capital needs during the festive season buildup, and the increasing shift of small businesses toward formal financial channels. Another crucial observation from the RBI was the diversification of credit demand. While large corporates remained cautious in borrowing due to global slowdown fears, MSMEs actively sought loans for expansion, inventory buildup, and technology upgrades. This shift reflects the growing role of small businesses in sustaining India’s economic momentum. The RBI also noted that the steady flow of credit to MSMEs aligns with the government’s long-term strategy of supporting entrepreneurship and job creation. The central bank underlined that continued support for MSMEs will be critical to sustaining the overall growth trajectory of bank lending in the coming quarters.