Credit and Finance for MSMEs: Member lending institutions (MLIs) including public and private sector banks and non-banking financial companies (NBFCs) under the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs have sanctioned 82 per cent of the targeted Rs 3 lakh crore amount as of February 28, 2021, according to MSME Minister Nitin Gadkari. According to the data from the National Credit Guarantee Trustee Company (NCGTC) – the implementing agency of the ECLGS scheme, the amount of loan sanctioned under the scheme stood at Rs 2.46 lakh crore till February-end, Gadkari said in a written reply to a question in the Rajya Sabha. Moreover, out of the 92.27 lakh total borrowers under ECLGS as of February 28, 87.50 lakh (95 per cent) borrowers were MSMEs.
“Majority MSMEs who were entitled to benefit from it have already benefited. However, some businesses claimed it to be of little benefit as they, anyways, will have to pay compound interest. Also, MSMEs were expecting the moratorium period to be extended for one year more (from August 2020) so that they can repay this amount gradually without any impact on their working capital. Moreover, with the sanctioned limit of up to 20 per cent of the loan outstanding as of February 29, 2020, many MSMEs were rendered ineligible for the scheme,” Pankaj Kumar Gupta, National President, Indian Industries Association told Financial Express Online.
The sanctioned amount was up from Rs 2.39 lakh crore (79.6 per cent) as of January 29, 2021, and Rs 2.14 lakh crore (71.3 per cent) as of January 8, 2021. The government had launched the ECLGS in May last year to help MSMEs impacted due to the pandemic recover. The scheme, which had set the target till October 31, 2020, for MSMEs to avail it, was later extended till March 31, 2020, with the launch of ECLGS 2.0 that was expanded in scope.
The amended version of ECLGS focused on entities in 26 stressed sectors identified by the Kamath Committee including power, construction, iron and steel manufacturing, roads, real estate, textiles, chemicals, consumer durables, non-ferrous metals, pharma manufacturing, logistics, gems, and jewellery, cement, auto components, hotels-restaurants-tourism, mining, plastic product manufacturing, automobiles manufacturing, auto dealership, aviation, sugar, port and port services, shipping, building materials, and corporate retail outlets.
The share of loans issued to micro borrowers was highest at 80.44 lakh followed by 4.26 lakh issued to small enterprises and 2.93 lakh issued to medium businesses, according to the data shared by Gadkari from NCGTC in a written reply to a separate question in the upper house of the Parliament on Monday.
Under ECLGS 2.0, accounts with credit outstanding of more than Rs 50 crore and up to Rs 500 crore as of February 29, 2020, were eligible to raise credit. The scheme also sought borrower accounts to be less than or equal to 30 days past due as of February 29, 2020, that is, they should not have been classified as SMA 1, SMA 2, or NPA by any of the lenders as of February 29, 2020. SMAs are special mention accounts showing signs of incipient stress that lead to the borrower defaulting in servicing loan.
