Govt extends Emergency Credit Line Guarantee Scheme
It was launched as part of the Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May to mitigate the distress caused by coronavirus-induced lockdown
New Delhi: The government on Monday extended the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs by one month till November 30, as the scheme has so far failed to meet the target of Rs 3 lakh crore.
The scheme was valid till October-end. It was launched as part of the Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May to mitigate the distress caused by coronavirus-induced lockdown, by providing credit to different sectors, especially micro, small and medium enterprises (MSMEs).
The scheme has been extended till November 30 or till such time that an amount of Rs 3 lakh crore is sanctioned under the scheme, whichever is earlier, the Finance Ministry said in a statement said. The step has been taken in view of the opening up of various sectors in the economy and the expected increase in demand during the ongoing festive season.
“This extension will provide a further opportunity to such borrowers who have not availed of the scheme so far, to obtain credit under the scheme,” it said. According to data uploaded by member lending institutions on the ECLGS portal, an amount of Rs 2.03 lakh crore has been sanctioned under the scheme to 60.67 lakh borrowers so far, while an amount of Rs 1.48 lakh crore has been disbursed.
Under the scheme, fully guaranteed and collateral-free additional credit to MSMEs, business enterprises, individual loans for business purposes, and MUDRA borrowers is provided to the extent of 20 per cent of their credit outstanding as on February 29, 2020.
Borrowers with a credit outstanding up to Rs 50 crore as on February 29, and with an annual turnover of up to Rs 250 crore are eligible under the scheme. Interest rates under the scheme are capped at 9.25 per cent for banks and financial institutions (FIs), and 14 per cent for non-banking financial companies (NBFCs).
Tenor of loans provided under the scheme is four years, including a moratorium of one year on principle repayment. A Rs 30,000-crore special liquidity scheme was closed on the due date as even less than a quarter of funds were disbursed to stressed NBFCs.
About Rs 7,227 crore were disbursed to NBFCs from the approved applications worth Rs 11,120 crore — received from 39 proposals — of non-bank lenders by the special entity set up for the purpose. The scheme kicked off from July 1, and closed on September 30, 2020.
Of the approved applications seeking Rs 11,120 crore, Rs 3,707 crore lapsed as the scheme ended on September 30. On August 1, the government widened the scope of the Rs 3 lakh crore-ECLGS scheme by doubling the upper ceiling of loans outstanding and including certain loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit. To ensure that more companies benefit from the scheme, it was decided to increase the upper ceiling of loans outstanding as on February 29 for being eligible under the scheme from Rs 25 crore to Rs 50 crore.
The maximum amount of Guaranteed Emergency Credit Line (GECL) funding under the scheme was correspondingly increased from Rs 5 crore to Rs 10 crore. Banks and NBFCs have approved loans worth about Rs 1,87,579 lakh crore, while disbursement stood at Rs 1,36,140 crore as on October 5.
MSME Credit Health Index launched
To provide a reliable measure and benchmark of the growth and strength of the MSME sector in India, TransUnion CIBIL in partnership with the Ministry of Statistics & Programme Implementation (MoSPI) has launched the MSME Credit Health Index. This measurement model, based on comprehensive data and intensive analytics is set to facilitate better MSME credit risk management, formulation of strategies and policies to support the revival and resurgence of the MSME sector and the economy.
The Index is built using credit data submitted by lending institutions to TransUnion CIBIL. It measures the health on growth and strength. An increasing growth index indicates improvement in credit growth and an increasing strength index implies better asset quality and therefore denotes an improvement in the structural strength of the sector.
Kshatrapati Shivaji, Secretary, Ministry of Statistics & Programme Implementation (MoSPI) said, “The MSME sector comprises of over six crore enterprises, contributes nearly 29% of India’s Gross Domestic Product (GDP) and provides employment to over 11 crore workers. Being a vital engine for growth, it is important to continuously monitor and measure the strength, growth and progress of the MSMEs, so that policies can be aligned and timely interventions taken.”
