Credit and Finance for MSMEs: The Finance Ministry, which had introduced the Emergency Credit Line Guarantee Scheme (ECLGS) final year by way of the Department of Financial Services (DFS) to help Covid-hit MSMEs, has spent the complete quantity allocated towards the implementation of the scheme for the monetary year 2020-21, according to the government information. The income expenditure incurred by the Department of Financial Services towards ‘assistance to the National Credit Guarantee Trustee Company (NCGTC)’, which is the assure provider beneath the ECLGS scheme to member lending institutions (MLIs), stood at Rs 4,000 crore as of January 22, 2021, according to the information shared by Minister of Finance Anurag Singh Thakur in the Lok Sabha on Monday. The quantity allocated towards the identical for FY21 was Rs 4,000 crore.
Under ECLGS, one hundred per cent assure coverage was offered by NCGTC to MLIs like public and private banks and NBFCs on the assured emergency credit line of up to Rs 3 lakh crore to eligible MSMEs and other borrowers. Banks extended extra working capital term loans up to 20 per cent of the MSMEs’ total outstanding credit up to Rs 25 crore as of February 29, 2020. ECLGS had the lion’s share – Rs 3 lakh crore — of the all round Rs 3.7 lakh crore MSME help package beneath the Atmanirbhar stimulus announced by the government final year.
An e-mail to DFS Secretary Debasish Panda and Additional Secretary Sanjeev Kaushik looking for comments was sent. The story will be updated when comments are shared.
“If there was any expense, it was supposed to be towards the credit guarantee fund. For a credit guarantee fund, you envisage the NPA volume for the near future, for instance, if there are 20 per cent NPAs, then let’s say for Rs 1 lakh crore you will have to create Rs 20,000 crore fund and likewise, for Rs 3 lakh crore you will have to create Rs 60,000 crore fund. But this doesn’t happen in one go. It happens over a period of time. So, in the beginning, you need some money to create the fund. This Rs 4,000 might have been spent for the same,” Anil Bhardwaj, Secretary General, Federation of Indian Micro and Small & Medium Enterprises (FISME) told TheSpuzz Online.
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According to the most current information readily available on the sanctioning and disbursing of loan applications beneath ECLGS, banks had sanctioned Rs 2.46 lakh crore loan as of February 28, 2021, MSME Minister Nitin Gadkari had stated in a written reply to a query in the Rajya Sabha. Moreover, out of the 92.27 lakh total borrowers beneath ECLGS as of February 28, 87.50 lakh (95 per cent) borrowers have been MSMEs.
“The Aatmanirbhar Bharat Packages comprise of various long-term schemes/ programmes/ policies announced with the objective of fighting COVID-19 and to make the country self-reliant…The ministries/departments have been tasked to formulate schemes/programmes announced under AatmaNirbhar Bharat Packages concerning them, take necessary approvals and meet the expenditure out of fund provided in Budget Estimates and seeking additional funds in Revised Estimates, wherever necessary,” stated Thakur in his written reply in the Lok Sabha.