Credit and Finance for MSMEs: The Modi government has enabled sanctioning of 71.3 per cent of its ambitious Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for Covid-hit MSMEs and other companies as of January 8, 2021. Under ECLGS 1., about 12 public sector banks, 23 private sector banks, and 31 non-banking economic organizations (NBFCs) sanctioned loan quantity of Rs 2,14,083 crore to 90,57,300 borrowers out of which Rs 1,65,886 crore was disbursed to 42,46,831 borrowers, according to the information shared by the Finance Ministry on Wednesday. This is up from 80,93,491 loans involving Rs 2,05,563 crore sanctioned as of December 4, 2020 though 40,49,489 loans had been disbursed involving Rs 1,58,626 crore.
Launched in May 2020 to assistance compact companies disrupted by the pandemic and the following lockdown, ECLGS 1. was amended on November 26, 2020, and extended till March 31, 2020, with the introduction of ECLGS 2. that was expanded in scope. Under 1., an emergency credit line is provided to MSMEs and other companies from banks and NBFCs up to 20 per cent of their complete credit outstanding as of February 29, 2020. MSMEs with up to Rs 25 crore outstanding and Rs one hundred crore turnover had been eligible. However, the turnover cap was removed post amendment in November.
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Under ECLGS 2., Rs 3,344 crore was disbursed to 1,188 borrowers out of Rs 15,571 crore sanctioned to 2,772 borrowers as of January 8, 2021. The amended version focused on entities in 26 stressed sectors identified by the Kamath Committee along with the healthcare sector with credit outstanding of more than Rs 50 crore and up to Rs 500 crore as of February 29, 2020. The scheme also mandated 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 particular mention accounts, which show indicators of incipient pressure, that lead to the borrower defaulting in servicing the debt. While SMA- are accounts getting payments partially or wholly overdue for 1-30 days, SMA-1 and SMA-2 accounts have payments overdue for 31-60 days and 61-90 days respectively. The revised scheme also has a 5-year repayment window up from 4 years in ECLGS 1.. National Credit Guarantee Trustee Company (NCGTC) is the assure provider beneath the ECLGS scheme.