Credit and Finance for MSMEs: ECLGS was devised for MSMEs, individual borrowers, and other business enterprises whose total fund-based credit outstanding across all lending institutions was up to Rs 50 crore as of February 29, 2020.
Credit and Finance for MSMEs: The number of guaranteed loans or guarantees issued to MSMEs under the government’s flagship post-Covid scheme for small businesses Emergency Credit Line Guarantee Scheme (ECLGS) has dropped by 76 per cent as of February 28 in the current financial year vis-a-vis in the previous year, according to the government data. Launched in May 2020, the number of guarantees issued during the May-March FY21 period stood at 90.39 lakh involving Rs 1.56 lakh crore while in the current year, the total guarantees issued were 21.60 lakh amounting to Rs 54,604 crore.
The data sourced from the National Credit Guarantee Trustee Company, which provides guarantee coverage under ECLGS, was shared by the Minister of State for Finance Bhagwat Karad in a written reply to a question in Lok Sabha during the ongoing budget session of Parliament.
“Optimistically, it indicates MSMEs, which had secured guarantees during FY21 under 1.0 and 2.0 version of the scheme, recorded significant recovery in the business. The number of guarantees was high in FY21 because MSMEs across sectors needed support. However, when the government launched 3.0 and 4.0 iterations of the scheme in FY22 to specifically focus on hospitality and healthcare sectors, which need extra support, the number of guarantees automatically dropped,” Ashok Saigal, MD, Frontier Technologies and Co-Chairman, CII National MSME Council told TheSpuzz Online.
The government had increased the scheme’s limit from Rs 3 lakh crore to Rs 5 lakh crore to focus on these sectors as most of the eligible borrowers outside these sectors had perhaps already benefited from it, added Saigal.
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Data showed that micro enterprises dominated guarantees issued in both financial years. In FY21, 83 lakh guarantees were issued to micro units in comparison to 4.47 lakh guarantees to small businesses, and 2.57 lakh guarantees to medium businesses. Likewise, 20.72 lakh guarantees were issued to micro units during the 11-month period of FY22 vis-a-vis 80,194 to small businesses and 7,810 to medium units.
ECLGS was devised for MSMEs, individual borrowers, and other business enterprises whose total fund-based credit outstanding across all lending institutions was up to Rs 50 crore as of February 29, 2020. The 2.0 version was launched in November 2020 to cater to the 26 sectors identified by the Kamath Committee and the healthcare sector as well. In March 2021, the 3.0 version was announced for MSMEs and other businesses in the hospitality, travel & tourism, leisure & sporting sectors. The latest 4.0 version was launched in May 2021 in response to the second wave of the pandemic to support hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants.