Abstract
Micro, small and medium enterprises (MSMEs) are critical elements in the creation of employment, local industrialisation and economic growth in regions, but institutional credit access has continued to be a limiting factor to many enterprises. It is against this backdrop that the current study discusses the trend of institutional credit flow and outstanding exposure to MSMEs in Dindigul District, Tamil Nadu, from 2021–2022 to 2024–2025. The study is based on secondary data obtained from district-level Lead Bank Office records, and the descriptive trend analysis is applied to determine the change in the credit disbursement, the number of accounts financed, the outstanding accounts and the average credit per account. The findings show that the total credit disbursed to MSMEs increased during the study period, while outstanding loan exposure also remained substantial. At the same time, there was a reduction in the number of accounts financed and the number of outstanding accounts, implying that the increase in aggregate credit did not always result in an increase in the coverage of borrowers. The increase in the average credit per account implies that credit intensity or concentration might be increasing among a smaller number of borrowers. These trends have been indicative of a key difference between credit growth in terms of volume and credit inclusion in terms of reach. The research contributes to the literature on MSME finance by presenting district-level data on how an increase in institutional credit may be coupled with a decrease in account coverage. It claims that the measures of MSME credit performance must go beyond aggregate disbursement indicators, and also the degree to which formal credit is extended to a wide range of enterprises. The article concludes by pointing out that closer monitoring of credit volume and coverage of borrowers at the district level is necessary in order to enhance inclusive financing of MSMEs.
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