Credit and Finance for MSMEs: Loans amounting to Rs 3.32 lakh crore were sanctioned under the Emergency Credit Line Guarantee Scheme (ECLGS) till April 30, 2022, of which Rs 2.54 lakh crore amount was disbursed, the Reserve Bank of India (RBI) said in its latest Financial Stability Report. The drawdown under ECLGS 1.0, 2.0 and its extension comprised over 97 per cent of the total guarantees issued. Launched on May 20, 2020, Rs 5-lakh-crore ECLGS provided 100 per cent guarantee coverage from National Credit Guarantee Trustee Company Limited (NCGTC) to select borrowers. It was originally devised for MSMEs and business enterprises whose total fund-based credit outstanding across all lending institutions was up to Rs 25 crore.
Private banks showed a greater appetite than public banks in utilising different versions of ECLGSs. According to the data, Rs 95,700 crore was disbursed to fresh borrowers and Rs 34,600 crore to repeat borrowers by private banks in comparison to Rs 79,800 crore to fresh borrowers and Rs 18,300 crore to repeat borrowers by public banks. On the other hand, NBFCs had disbursed Rs 20,800 crore to fresh borrowers and Rs 7,700 to repeat borrowers.
In terms of borrower count, private banks disbursed credit to 67.61 lakh new borrowers in comparison to 22.65 lakh new borrowers supported by public sector banks. However, the number of repeat borrowers remained similar for public banks at 1.02 lakh and private banks at 78,000 while NBFCs had backed 95,000 repeat borrowers and 11.35 lakh new borrowers, data showed.
ECLGS has undergone multiple iterations through ECLGS 1.0, ECLGS 1.0 (Extension), ECLGS 2.0, ECLGS 2.0 (Extension), ECLGS 3.0, ECLGS 3.0 (Extension) and ECLGS 4.0 since its launch. The validity of ECLGS was extended to March 31, 2023, or till guarantees for an amount of Rs 5 lakh crore are issued.
In terms of asset quality, while the aggregate gross non-performing asset (GNPA) ratio of public and private banks in the MSME sector moderated from 11.3 per cent in September 2021 to 9.3 per cent in March 2022, it still remains relatively high, the report noted. Also, Rs 46,186-crore restructured MSME portfolio, which constitutes 2.5 per cent of total advances under the May 2021 Resolution Framework 2.0, has the potential to create stress in the sector, RBI cautioned in the report.