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Banks sanction about Rs 1.14 lakh cr loans to MSMEs

Under Emergency Credit Line Guarantee Scheme

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GECL, National Credit Guarantee Trustee Company, NCGTC, Micro Units Development and Refinance Agency, MUDRA, Guaranteed emergency credit line, MSME sector, Maharashtra, Tamil Nadu, State Bank of India, Punjab National Bank, Aatmanirbhar Bharat, Nirmala Sitharaman, COVID-19 pandemic, Emergency Credit Line Guarantee Scheme

Banks have sanctioned loans of about Rs 1,14,502 crore under the Rs three lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector reeling under the economic slowdown caused by the COVID-19 pandemic.

However, disbursements against this stood at Rs 56,091.18 lakh crore till 4 July 2020 under the 100 percent ECLGS for micro, small and medium enterprises (MSMEs).

The scheme is the biggest fiscal component of the Rs 20 lakh crore 'Aatmanirbhar Bharat Abhiyan' package announced by Finance Minister Nirmala Sitharaman in May 2020.

The latest numbers on ECLGS, as released by the Finance Ministry, comprise disbursements by all 12 public sector banks (PSBs), 20 private sector banks and 10 non-banking financial companies (NBFCs).

Under ECLGS, the loan amounts sanctioned by PSBs increased to Rs 65,863.63 crore of which Rs 35,575.48 crore have been disbursed as of 4 July 2020.

At the same time, private sector banks have sanctioned Rs 48,638.96 crore and disbursed Rs 20,515.70 crore.

The State Bank of India (SBI) has sanctioned Rs 20,628 crore loans and disbursed Rs 13,405 crore. It is followed by the Punjab National Bank, which has sanctioned Rs 8,689 crore. However, its disbursements stood at Rs 2,595 crore as of 4 July 2020.

The business units of Maharashtra have got the highest cumulative sanction of Rs 6,856 crore from banks, while disbursement was to the tune of Rs 3,605 crore as of July 4. It is followed by Tamil Nadu, with sanction of Rs 6,616 crore loans and disbursements of Rs 3,871 crore.

On 21May 2020, the Cabinet approved additional funding of up to Rs three lakh crore at a concessional rate of 9.25 percent through ECLGS for MSME sector.

Under the scheme, 100 percent guarantee coverage will be provided by the National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs three lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of a guaranteed emergency credit line (GECL) facility.

For this purpose, a corpus of Rs 41,600 crore was set up by the government, spread over the current and next three financial years.

The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to 31 October 2020 or till the amount of Rs three lakh crore is sanctioned under GECL, whichever is earlier.

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