Credit and finance for MSMEs: The government’s flagship credit support scheme for MSMEs Emergency Credit Line Guarantee Scheme (ECLGS) has sanctioned 1.19 crore loans (borrowers) involving 71 per cent or Rs 3.58 lakh crore of the total scheme limit of Rs 5 lakh crore while 57 per cent or Rs 2.85 lakh crore loans have been disbursed as of November 30, 2022. Out of the total sanctioned amount, 66 per cent has been extended to MSME borrowers while 95.17 per cent of loans sanctioned also belonged to MSMEs. The data was shared by the Minister of State in the finance ministry Bhagwat Karad in the Lok Sabha on Monday.

In terms of bad loans under ECLGS, the non-performing assets (NPAs) as a percentage of loans guaranteed was 3.89 per cent amounting to Rs 13,964.58 crore, according to the data cited from the National Credit Guarantee Trustee Company (NCGTC) which guarantees coverage to member lending institutions under ECLGS.

The scheme was launched in May 2020 as part of Aatmanirbhar Bharat Abhiyaan to support eligible MSMEs and other businesses in recovering post-Covid. Banks were provided with a complete credit guarantee for loans given by them under the scheme to eligible MSMEs. The admissible guarantee limit under the scheme was increased from Rs 4.5 lakh crore to Rs 5 lakh crore earlier this year, with the additional guarantee cover of Rs 50,000 crore earmarked exclusively for the hospitality and related enterprises including the civil aviation sector. 

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The scheme saw 95.41 lakh beneficiaries during its launch year (May 2020-March 2021), indicating the number of MSMEs impacted due to the pandemic in comparison to 23 lakh beneficiaries during FY22, according to data shared by Karad in the Lok Sabha in July this year. 

“The drop in the beneficiary count in FY22 indicates that as economic recovery started to happen with the Atmanirbhar package, MSMEs also recovered. Moreover, if the banks are unable to sanction the entire Rs 5 lakh crore scheme’s cover till March 2023, it would mean that the stress in the MSME sector, which was assumed to be extremely high, wasn’t that high or the recovery in the MSME sector has been faster than what one had thought,” Anil Bhardwaj, Secretary General, Federation of Indian Micro & Small & Medium Enterprises (FISME) had told FE Aspire. 

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