NEW DELHI: The Union Ministry of Finance on Tuesday disclosed that the banking system has so far sanctioned loans worth Rs 1,14,502 crore to micro, small and medium businesses (MSMEs) under the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS).
This emergency credit line comprises the largest single component of the government’s ‘Aatmanirbhar’ relief package announced to combat the fallout of the COVID-19 pandemic. According to a statement from finance minister Nirmala Sitharaman, while sanctioned loans under the emergency credit line have crossed Rs 1 lakh crore, the amount disbursed so far stands at Rs 56,091.18 crore as of July 4.
As of June 20, loans sanctioned had stood at around Rs 79,000 crore, of which about Rs 35,000 crore had been disbursed. Under the ECLGS scheme, the government provides 100 per cent backing for the Guaranteed Emergency Credit Line (GECL), which extends a pre-aproved loan sanction of 20 per cent of the MSME borrower’s outstanding loans. MSMEs with total outstanding loans of up to Rs 25 crore as on February 29, and annual turnover of up to Rs 100 crore for FY20 are eligible.
Credit line for individuals
While the amount of credit extended under the ECLGS is rising sharply for registered businesses, the financial system, particularly NBFCs, is also seeking a similar credit line for individual borrowers. Many of these borrowers have taken individual loans for their businesses too, industry body Finance Industry and Development Council (FIDC) wrote in a letter to the finance ministry.
“More than 75 per cent of our customers take loans in their individual names as they don’t have any business establishment or partnerships. They conduct their business in their individual names. We request you to considering including all loans given to individuals for purchase of vehicles including construction equipment and taxis which are registered for commercial purposes as eligible for assistance under the ECLGS,” FIDC said.
On July 2, the National Credit Guarantee Trustee Company (NCGTC), the nodal body implementing the ECLGS, had clarified that only auto loans extended under the Mudra scheme would be eligible for this benefit. While reports say that the NCGTC is set to do the same, the authority has made no official communication.
PSUs drive rise in ECLGS
The latest data, which covers 12 public banks, 20 private sector banks and 10 non-banking financial companies, shows PSUs alone have sanctioned Rs 65,863.63 crore, of which Rs 35,575.48 crore has been disbursed as of July 4. Private banks, on the other hand, have sanctioned Rs 48,638.96 crore and disbursed Rs 20,515.70 crore. Market leader SBI had sanctioned Rs 20,628 crore of loans and disbursed Rs 13,405 crore, followed by Punjab National Bank, which sanctioned Rs 8,689 crore and disbursed Rs 2,595 crore as of July 4.