DFS is seeking lender data on war-hit SMEs

The Department of Financial Services (DFS) has sought data from lenders, including the State Bank of India (SBI), on the economic impact of the ongoing fuel and trade disruptions - particularly on the micro, small and medium enterprises (MSME) sector.

People familiar with the matter told ET that banks have been asked to provide details on sectors affected, like the Morbi-based ceramics industry or the restaurant industry hit due to non-availability of LPG.

Also, on the list is the airline industry, wherein fuel is the largest input cost. Details have been asked from banks to gauge the nature and impact of the ongoing crisis to help the government tailor relief measures to different sectors if needed, said the people cited above.


“Information has been asked by the DFS earlier this month in what is probably the first step in getting a relief package ready for sectors which are the most vulnerable. Broadly, the MSME sector is the worst hit so the data has been asked for from this sector. There could be some announcement from the government after the ongoing state elections,” said a person aware of the discussions.

SBI, the largest bank in the country, played a key role in collating and sharing information with the government. Bankers expect the government to firm up a package for MSMEs with moratorium or interest rate subventions on the lines of the post-US tariff initiatives.

The measures could be announced after the ongoing state elections.

SBI and DFS did not reply to separate emails seeking comment.

Policy precedent

In November, the government had approved an Export Promotion Mission (EPM) to help exporters deal with high tariffs imposed by the US.

Under the scheme, the government had extended support to sectors impacted by recent global tariff escalations, such as textiles, leather, gems and jewellery, engineering goods, and marine products. The scheme’s focus was to provide affordable financing for MSMEs through measures such as interest subvention, export factoring, collateral guarantees and credit enhancement support.

“The thinking now is that MSMEs, who are probably the most vulnerable, need banking support to get over the current geopolitical crisis. Banking support could be in the form of an interest payment moratorium beyond the 90-day NPA recognition period or a subsidy from the government,” said a second person aware of the discussions.

Bankers said that though stress is not yet visible in the MSME sector, it is possible that the situation may deteriorate if the US-Iran conflict prolongs. They point to stress faced in India’s ceramic manufacturing hub of Morbi, where kilns went cold for the first time in years due to non-availability of liquefied natural gas (LNG).

In a report in March rating agency Crisil said that India’s Rs 53,000 crore ceramic tiles industry will log a decline in growth for the second consecutive year this fiscal due to the twin impact of ongoing developments West Asia with exports which are at 40% of the industry’s revenues impacted by logistical challenges and supply-chain realignment and also as LNG and propane, key raw materials for the industry are in short supply.

“Then there are the second-order effects due to higher fuel prices, which are no longer visible but could have a far-reaching impact on growth and consumption. All these factors will be considered while deciding the package,” said the second person aware of the discussions.

Expectations are that the relief package will be unveiled after the results for the 2026 assembly elections in Assam, Kerala, Tamil Nadu, West Bengal, and Puducherry, which will be declared on May 4.