Banks sanction Rs 1.38 trn loans to MSMEs under credit guarantee scheme

The scheme is the biggest fiscal component of the Rs 20-trillion Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May

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MSMEs | Bank loans | Finance Ministry

The Finance Ministry on Tuesday said banks have sanctioned loans of about Rs 1,37,586 crore under the Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS) for MSME sector, hit hard by the economic slowdown due to Covid-19 pandemic.

However, disbursements against this stood at Rs 92,090.24 crore till August 3 under the 100 per cent ECLGS for micro, small and medium enterprises (MSMEs).

The scheme is the biggest fiscal component of the Rs 20-trillion Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May.

The latest numbers on the ECLGS, as released by the Finance Ministry, include disbursements by all 12 public sector banks (PSBs), 23 private banks and 30 non-banking financial companies (NBFCs).

Last week, the government widened the scope of the Rs 3-trillion MSME credit guarantee scheme by doubling the upper ceiling of loans outstanding to Rs 50 crore and including certain individual loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit.

The scheme is now applicable for companies with an annual turnover of Rs 250 crore as against the earlier Rs 100 crore and the maximum amount of guaranteed emergency credit line (GECL) funding under the scheme doubled to Rs 10 crore.

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“As of 03 Aug 2020, the total amount sanctioned under the 100 per cent Emergency Credit Line Guarantee Scheme by #PSBs and private banks stands at Rs 1,37,586.54 crore, of which Rs 92,090.24 crore has already been disbursed,” the finance minister said in a tweet.

Under the ECLGS, the loan amounts sanctioned by PSBs increased to Rs 72,820.26 crore, of which Rs 52,013.73 crore has been disbursed as of August 3, she said.

At the same time, private sector banks have sanctioned Rs 64,766 crore and disbursed Rs 40,076 crore.

“Compared to 23 July 2020, there is an increase of Rs 7,094.75 crore in the cumulative amount of loans sanctioned & an increase of Rs 10,025.23 crore in the cumulative amount of loans disbursed by both #PSBs and private sector banks combined as on 03 Aug 2020,” Sitharaman said.

Among the banks, SBI has sanctioned the highest amount at Rs 21,121 crore of loans and disbursed Rs 16,047 crore. It is followed by Punjab National Bank, which has sanctioned Rs 9,809 crore. However, its disbursements stood at Rs 6,351 crore as of August 3.

On May 20, the Cabinet approved additional funding of up to Rs 3 trillion at a concessional rate of 9.25 per cent through ECLGS for MSME sector.

Under the scheme, 100 per cent guarantee coverage is provided by the National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 trillion to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of a 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 October 31 or till the amount of Rs 3 trillion is sanctioned under GECL, whichever is earlier.

All MSME borrower accounts with an outstanding credit of up to Rs 50 crore as on February 29, which were less than or equal to 60 days past due as on that date, i.e., regular, SMA-0 and SMA-1 accounts, and with an annual turnover of up to Rs 250 crore are eligible for GECL funding under the scheme.