Credit and finance for MSMEs: The government’s post-Covid Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs and other businesses has been able to save at least 14.6 lakh MSME loan accounts, said public lender State Bank of India (SBI) in a special report on the MSME sector on Monday. This was the second annual report by SBI updating MSMEs’ performance post pandemic. In its Jan 2022 report, SBI had noted that nearly 13.5 lakh MSME accounts were saved with credit support under ECLGS.
Out of the 14.6 lakh MSMEs saved due to the ECLGS scheme since its launch in May 2020, almost 93.8 per cent were micro and small enterprises, the report authored by SBI’s Group Chief Economic Adviser Soumya Kanti Ghosh said.
On the other hand, in absolute terms, MSME accounts worth Rs 2.2 lakh crore had improved since the inception of ECLGS for the entire banking industry which means that around 12 per cent of the outstanding MSME credit was saved from slipping into the NPA category because of the ECLGS scheme, said Ghosh analysing the data.
Also read: Nearly 17% of ECLGS loans have turned into NPAs: RBI report
Turning NPAs would have led to unemployment for 1.65 crore workers working with these MSMEs. Thus, the ECLGS scheme has saved the livelihood of 6.6 crore people assuming four family members per worker, the report said.
Among sectors, the trading sector (kirana shops, etc.) benefitted the most from ECLGS followed by food processing, textiles and commercial real estate while in terms of business type, private entities were the biggest beneficiaries followed by proprietorship firms. State-wise, Gujarat was the biggest beneficiary of the scheme, followed by Maharashtra, Tamil Nadu and Uttar Pradesh.
The SBI report comes days after the Reserve Bank of India (RBI) released its Financial Stability Report in December 2022. According to the report ECLGS was pivotal in providing support and additional liquidity for business entities to tide over COVID-19. Under the ECLGS, Rs 2.82 lakh crore were disbursed till September 30, 2022, of which scheduled commercial banks had disbursed Rs 2.46 lakh crore, with a predominant share of disbursals under the ECLGS 1.0 version.
Also read: 6 crore families’ livelihood saved by ECLGS scheme for MSMEs: SBI’s Soumya Kanti Ghosh
A disaggregated analysis of borrowers availing the ECLGS indicated that the majority of the smaller borrowers belonged to the micro enterprises category. On the other hand, in terms of the quantum of disbursal, about a third was availed by businesses other than micro, small and medium enterprises, indicating the broad nature of stress related to the pandemic. As of September, last year, one-sixth of ECLGS loans had turned NPAs.
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