Credit and Finance for MSMEs: The Modi government has enabled sanctioning of 71.3 per cent of its ambitious Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for Covid-hit MSMEs and other businesses as of January 8, 2021. Under ECLGS 1.0, around 12 public sector banks, 23 private sector banks, and 31 non-banking financial companies (NBFCs) sanctioned loan amount of Rs 2,14,083 crore to 90,57,300 borrowers out of which Rs 1,65,886 crore was disbursed to 42,46,831 borrowers, according to the data shared by the Finance Ministry on Wednesday. This is up from 80,93,491 loans involving Rs 2,05,563 crore sanctioned as of December 4, 2020 while 40,49,489 loans were disbursed involving Rs 1,58,626 crore.
Launched in May 2020 to support small businesses disrupted by the pandemic and the following lockdown, ECLGS 1.0 was amended on November 26, 2020, and extended till March 31, 2020, with the introduction of ECLGS 2.0 that was expanded in scope. Under 1.0, an emergency credit line is offered to MSMEs and other businesses from banks and NBFCs up to 20 per cent of their entire credit outstanding as of February 29, 2020. MSMEs with up to Rs 25 crore outstanding and Rs 100 crore turnover were eligible. However, the turnover cap was removed post amendment in November.
Under ECLGS 2.0, Rs 3,344 crore was disbursed to 1,188 borrowers out of Rs 15,571 crore sanctioned to 2,772 borrowers as of January 8, 2021. The amended version focused on entities in 26 stressed sectors identified by the Kamath Committee along with the healthcare sector with credit outstanding of more than Rs 50 crore and up to Rs 500 crore as of February 29, 2020. The scheme also mandated 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, which show signs of incipient stress, that lead to the borrower defaulting in servicing the debt. While SMA-0 are accounts having payments partially or wholly overdue for 1-30 days, SMA-1 and SMA-2 accounts have payments overdue for 31-60 days and 61-90 days respectively. The revised scheme also has a five-year repayment window up from four years in ECLGS 1.0. National Credit Guarantee Trustee Company (NCGTC) is the guarantee provider under the ECLGS scheme.
