MSME credit guarantee scheme: Banks disbursement crosses Rs 1 lakh crore-mark

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August 20, 2020 8:40 PM

The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May to mitigate the distress caused by lockdown due to COVID-19 by providing credit to different sectors, especially MSMEs.

At the same time, sanctioned amount too have surged past Rs 1.50 lakh crore at the end of August 18 under the 100 per cent ECLGS for micro, small and medium enterprises.

The finance ministry on Thursday said banks have disbursed more than Rs 1 lakh crore under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, impacted by the economic slowdown due to COVID-19. At the same time, sanctioned amount too have surged past Rs 1.50 lakh crore at the end of August 18 under the 100 per cent ECLGS for micro, small and medium enterprises.

The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May to mitigate the distress caused by lockdown due to COVID-19 by providing credit to different sectors, especially MSMEs.

The latest numbers on ECLGS, as released by the finance ministry, comprise disbursements by all 12 public sector banks (PSBs), 24 private sector banks and 31 non-banking financial companies (NBFCs). “Under the 100 per cent ECLGS backed by a Government of India guarantee, banks from public and private sectors have sanctioned loans worth over Rs 1.5 lakh crore as of August 18, 2020, of which more than Rs 1 lakh crore has already been disbursed,” the Finance Ministry said in a statement.

The total amount sanctioned under the scheme by banks stands at Rs 1,50,759.45 crore, of which Rs 1,02,245.77 crore has already been disbursed as of August 18. “Under the ECLGS, Public Sector Banks (PSBs) have sanctioned loans of Rs 76,044.44 crore, out of which Rs 56,483.41 crore has already been disbursed. Whereas Private Sector Banks have sanctioned loans of Rs 74,715.02 crore out of which Rs 45,762.36 crore has already been disbursed,” it said.

The top lenders under the scheme are State Bank of India (SBI), Canara Bank, Punjab National Bank (PNB), Bank of India, Union Bank of India and HDFC Bank. Business units of Maharashtra have recieved highest cumulative sanction of Rs 7,756 crore from banks, while disbursement stood at Rs 6,007 crore at the end of August 18. It is followed by Tamil Nadu with a sanction of Rs 7,740 crore, and disbursement of Rs 5,693 crore.

On May 20, the Cabinet approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for MSME sector. Under the scheme, 100 per cent guarantee coverage will be provided by the National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of a guaranteed emergency credit line (GECL) facility.

For this purpose, a corpus of Rs 41,600 crore was set up by the government, spread over the current and next three financial years. The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till the amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier.

All MSME borrower accounts with an outstanding credit of up to Rs 50 crore as on February 29, which were less than or equal to 60 days past due as on that date, i.e., regular, SMA-0 and SMA-1 accounts, and with an annual turnover of up to Rs 250 crore, are eligible for GECL funding under the scheme.

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