Sometime ago we reported on the downfall of NBFCs and PSBs in the wake of this crisis. With the Emergency Credit Line Guarantee Scheme which is an effort by the government to help MSME through these tough times, real progress has been made as indicated by data released by Finance Ministry recently.
What is ECLGS?
On May 23rd this year NCGTC (National Credit Guarantee Trustee Company Ltd.) issued a letter addressed to the chairman, managing directors, Chief Executive Officers of all commercial banks, NBFCs, and other financial institutions announcing the ECLGS to provide 100% guarantee coverage for additional working capital term loans through Banks and FIs and additional term loans from NBFCs amounting to a maximum of ₹ 25 Crore in terms of outstanding credit subject to the account being less than or equal to 60 days past due as on that date.
The scheme is valid till October 31, 2020 and is eligible for entities with up to ₹ 100 Crore annual turnover.
The Progress So Far
As per the data released by Ministry of Finance, till date loans worth ₹ 32,687.27 crores has been sanctioned to MSMEs and disbursal of ₹ 10,697.33 Crore has gone through under this scheme.
- ₹ 42,740 crores of loans have been sanctioned and ₹ 22,197 crores crores have been disbursed to this day by state owned banks.
- On a rather positive note, private sector banks put together stand at ₹ 75,426 crores of sanctioned loans and ₹ 32,895.86 crores in disbursements.
- Gujarat emerges at the top of chart in terns of state wise data at ₹ 4,309.10 crores of cumulative loan sanctions to MSMEs.
- Next was Maharashtra with cumulative loan sanctions pegging at ₹ 4,146.99 crores.
- Tamil Nadu came in third with regards to sanctioned loans at ₹ 3,144.50 crores but topped the leaderboard when it came to cumulative disbursements standing at ₹2,625.11 crores.
- Cumulative disbursement for Gujarat and Maharashtra stands at ₹ 1,739.86 crores and ₹ 1,883.96 crore respectively.
- Loans sanctioned to MSMEs in Uttar Pradesh sttod at ₹ 3,257.08 crores and disbursements amounted to ₹1,449.21 crore.
- Bank wise sanctions indicated that maximum cumulative sanction came from State Bank of India standing at ₹ 16,234.85 crore through more than 2 lakh accounts with disbursements pegged at ₹ 10,960.33 crore for 1.13 lakh accounts.
What’s ahead?
The scheme is a targeting response to the economic dissolution amidst the Covid-19 situation and is aimed at providing relief to the MSME sector by encouraging member lending institutions to grant credits to a maximum of ₹ 3 lakh crore at minimal costs thereby enabling MSMEs to function and be in operations after the lockdown is over. As per the terms of this scheme which is 100% guaranteed by the NCGTC, this loan will carry a moratorium for the first year which will be extended in the form of additional working capital term loan extension in case of banks and additional term loans with regards to NBFCs.
Click here to learn how you can apply today!