In three months from introducing a government-friendly guarantee scheme, the finance ministry has given data for repayment of RS.1 trillion loans to banks and non-bank lenders, under an Emergency Credit Line Guarantee Scheme(ECLGS) program, for stressed small and medium-sized micro-enterprises (SMEs).
The payment is just one-third the sum set by the finance ministry as part of the Aatma Nirbhar Bharat package of a total credit guarantee of Rs.3 trillion. The program will only be effective for a few months now. As of 18 August, loans worth over RS.1.5 trillion were approved.
In May, ECLGS was launched to help poor and small companies overcome the crisis of Covid-19. The non-asset loan is expected to make a payment, rent, and restocking expenses possible for small companies.
Even when banks of the public sector have been carrying out sanctions in recent months and payment disbursements, recent data indicate that banks and non-banking financial enterprises (NBFCs) of the private sector have also stepped up their credit payments to match state banks. The average loan payment by private banks, however, is much more than the banks of state property.
“Under the ECLGS, open segment banks (PSBs) have authorized advances of Rs.76,044.44 crore, out of which Rs.56,483.41 crore has just been dispensed. While private segment banks have authorized advances of Rs.74,715.02 crore, out of which Rs.45,762.36 crore has just been dispensed. The top loan specialists under the plan are State Bank of India (SBI), Canara Bank, Punjab National Bank (PNB), Bank of India, Union Bank of India and HDFC Bank,” an official explanation said.
At the beginning of this month, the Ministry of Finance expanded the ECLGS region to allow loans to be made available for large, small, and medium-sized enterprises ( MSMEs) and professionals. The Government has raised the annual turnover cap for companies that could use the scheme to loans to Rs. 250 crore out of Rs. 100 crore in line with the Current Concept of MSMEs. .There is also an increase in the maximum amount of loans available in the framework of the scheme to Rs.10 crore from Rs.5 crore.
The government also permits individuals to make use of ECLGS, subject to eligibility requirements because they have already secured loans for business purposes.
The expansion of the scheme by individual loans for working capital and larger MSMEs, Minister of Finance Nirmala Sitharaman had said, is expected to increase credit off-take by Rs.1 trillion in a total of Rs. 3 trillion for the scheme.
As of August 17, 1.22 crore Kisan Credit Cards have been approved by the Ministry of Finance in a separate statement by a credit cap of Rs.1.02 trillion that will assist the recovery and acceleration of rural economic development.
In May, Sitharaman announced lockdown-hit farmers’ credit and relief initiatives to cover the Rs.25 million of farmers without KCCs, including Rs.2 trillion loans.
