Home / Industry / Banking /  So far, lenders have disbursed only 1 tn to stressed MSMEs

NEW DELHI : The Centre’s much-publicised credit guarantee scheme to aid small businesses resume operations during the crisis caused by the coronavirus pandemic may not have achieved the desired results with total disbursements at just about a third of the finance ministry’s target of 3 trillion since its launch three months ago.

The scheme, part of the government’s Aatmanirbhar Bharat initiative, ends in about two months with sanctioned loans touching the 1.5 trillion mark as on 18 August.

Banks and non-bank lenders have so far disbursed 1 trillion under the collateral-free emergency credit line guarantee scheme (ECLGS) for stressed micro, small and medium enterprises (MSMEs), showed data from the finance ministry.

ECLGS, launched in May, sought to enable small businesses pay salaries and rent, besides meeting restocking expenses.

Even as public sector banks (PSBs) led sanctions and disbursal initially, latest data showed that private sector banks and non-banking financial companies (NBFCs) have stepped up credit disbursal on a par with state-owned peers. However, average loan disbursement per account by private banks is far more than the state-run banks.

“Under ECLGS, PSBs have sanctioned loans of 76,044.44 crore, out of which 56,483.41 crore has already been disbursed. Private sector banks have sanctioned loans of 74,715.02 crore, while 45,762.36 crore has been disbursed. The top lenders under the scheme are State Bank of India, Canara Bank, Punjab National Bank, Bank of India, Union Bank of India and HDFC Bank," the ministry said.

Earlier this month, the finance ministry expanded the ambit of ECLGS to allow large MSMEs and professionals to avail loans. In line with the new definition of MSMEs, the Centre increased the annual turnover of companies that could avail loans from 100 crore to 250 crore. The loan amount was also increased from 5 crore to 10 crore. To avail the loan under ECLGS, entrepreneurs were to meet certain eligibility criteria.

Finance minister Nirmala Sitharaman had said that the expansion of the scheme to include individual loans for working capital purposes and larger MSMEs will help boost credit offtake by 1 trillion within the overall 3 trillion target. In a separate statement, the ministry said, as on 17 August, 12.2 million Kisan Credit Cards were sanctioned with credit limit of 1.02 trillion, which will support revival of the rural economy and accelerate agricultural growth. In May, Sitharaman had announced measures to provide credit and relief to lockdown-hit farmers, including a 2 trillion credit scheme to cover 25 million farmers who do not have KCCs.

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