Credit and Finance for MSMEs: Member lending institutions (MLIs) which includes public and private sector banks and non-banking economic businesses (NBFCs) below the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs have sanctioned 82 per cent of the targeted Rs 3 lakh crore quantity as of February 28, 2021, according to MSME Minister Nitin Gadkari. According to the information from the National Credit Guarantee Trustee Company (NCGTC) – the implementing agency of the ECLGS scheme, the quantity of loan sanctioned below the scheme stood at Rs 2.46 lakh crore till February-finish, Gadkari stated in a written reply to a query in the Rajya Sabha. Moreover, out of the 92.27 lakh total borrowers below ECLGS as of February 28, 87.50 lakh (95 per cent) borrowers have been MSMEs.
“Majority MSMEs who were entitled to benefit from it have already benefited. However, some businesses claimed it to be of little benefit as they anyways have to pay compound interest. Also, MSMEs were expecting the moratorium period to be extended for one year more (from August 2020) so that they can repay this amount gradually without any impact on their working capital. Moreover, with the sanctioned limit of up to 20 per cent of the loan outstanding as of February 29, 2020, rendered many MSMEs ineligible for the scheme,” Pankaj Kumar Gupta, National President, Indian Industries Association told TheSpuzz Online.
The sanctioned quantity was up from Rs 2.39 lakh crore (79.6 per cent) as of January 29, 2021, and Rs 2.14 lakh crore (71.3 per cent) as of January 8, 2021. The government had launched the ECLGS in May final year to assist MSMEs impacted due to the pandemic recover. The scheme, which had set the target till October 31, 2020, for MSMEs to avail it, was later extended till March 31, 2020, with the launch of ECLGS 2. that was expanded in scope.
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The amended version of ECLGS focused on entities in 26 stressed sectors identified by the Kamath Committee which includes energy, building, iron and steel manufacturing, roads, genuine estate, textiles, chemical substances, customer durables, non-ferrous metals, pharma manufacturing, logistics, gems, and jewellery, cement, auto elements, hotels-restaurants-tourism, mining, plastic item manufacturing, automobiles manufacturing, auto dealership, aviation, sugar, port and port services, shipping, creating supplies, and corporate retail outlets.
The share of loans issued to micro borrowers was highest at 80.44 lakh followed by 4.26 lakh issued to compact enterprises and 2.93 lakh issued to medium enterprises, according to the information shared by Gadkari from NCGTC in a written reply to a separate query in the upper home of the Parliament on Monday.
Under ECLGS 2., accounts with credit outstanding of more than Rs 50 crore and up to Rs 500 crore as of February 29, 2020, have been eligible to raise credit. The scheme also sought borrower accounts to be much less than or equal to 30 days previous due as of February 29, 2020, that is, they need to not have been classified as SMA 1, SMA 2, or NPA by any of the lenders as of February 29, 2020. SMAs are unique mention accounts displaying indicators of incipient tension that lead to the borrower defaulting in servicing loan.