MSME loans: Disbursements exceed Rs 1 lakh crore, says Finance Ministry

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August 21, 2020 3:15 AM

The ministry also said, to soften the Covid blows to farmers, 1.22 crore Kisan Credit Cards have been sanctioned under a special saturation drive, with a total credit limit of Rs 1,02,065 crore.

As of August 18, public Sector Banks (PSBs) sanctioned loans of Rs 76,044 crore under the scheme, out of which Rs 56,483 crore was disbursed.As of August 18, public Sector Banks (PSBs) sanctioned loans of Rs 76,044 crore under the scheme, out of which Rs 56,483 crore was disbursed.

Banks’ loan disbursement to mostly MSMEs under the Emergency Credit Line Guarantee Scheme (ECLGS) exceeded Rs 1 lakh crore since its roll-out on June 1, while sanctioned credit stood at over Rs 1.5 lakh crore, the finance ministry said on Thursday, highlighting the success of the programme.

As of August 18, public Sector Banks (PSBs) sanctioned loans of Rs 76,044 crore under the scheme, out of which Rs 56,483 crore was disbursed. Similarly, private banks dibursed Rs 45,762 crore, out of the sanctioned loans of Rs 74,715 crore, the ministry said.

Under the ECLGS, announced as part of the government’s Rs 21 lakh-crore relief package in May, the Centre has pledged full guarantee for up to 20% extra, collateral-free working capital loans, subject to an overall limit of Rs 3 lakh crore. While the scheme was initially meant for only MSMEs, the govenrment, earlier this month, decided to relax the eligibility criteria to cover professionals and enable a wider pool of businesses to benefit from it.

Not surprsingly, SBI led the pack of state-run lenders with disbursement of Rs 17,095 crore, followed by Punjab National Bank (Rs 7,197 crore), Canara Bank (Rs 6,556 crore) and Bank of Baroda (Rs 5,937 crore). The states that witnessed most of the disbursement by the PSBs were Maharashtra (Rs 6,007 crore), Tamil Nadu (Rs 5,694 crore), Uttar Pradesh (Rs 5,554 crore), Gujarat (Rs 5,159 crore) and Karnataka (Rs 3,590 crore).

The ministry also said, to soften the Covid blows to farmers, 1.22 crore Kisan Credit Cards have been sanctioned under a special saturation drive, with a total credit limit of Rs 1,02,065 crore. “This will go a long way in reviving the rural economy and accelerating agricultural growth,” the ministry said.

While announcing the Aatma Nirbhar Bharat Package, the government had declared a concessional credit of Rs 2 lakh crore, which was estimated to benefit 2.5 crore farmers, including fishermen and dairy farmers.

Farmers who take loans through KCC card are also eligible for cover under the crop insurance scheme. No collateral is required for loans up to Rs 1.6 lakh from SBI. This drive came as a boost to kharif sowing, which typically starts from June, with the arrival of seasonal monsoon showers.

As for the ECLGS, after expanding its scope in August, the government had estimated that additional beneficiaries could be sanctioned guaranteed loans of about Rs one lakh crore, although there is no review of the scheme’s overall credit limit (Rs three lakh crore).

As part of its expanded coverage, companies with an annual turnover limit of up to Rs 250 crore are now eligible to tap the scheme, against that of Rs 100 crore earlier, in sync with the revised definition of the MSMEs. Even individuals such as doctors, chartered accountants, lawyers, etc, who wish to take loans for professional purposes, are now covered under the scheme.

Similarly, eligible businesses with up to Rs 50 crore outstanding as of February 29, instead of Rs 25 crore earlier, can avail of the additional guaranteed loans. The government has earmarked a corpus of Rs 41,600 crore over the current and the next three financial years to implement the ECLGS. As many as 45 lakh units may benefit from the scheme, according to a government estimate.

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