PremiumNEW DELHI: State Bank of India (SBI), HDFC Bank, Bank of Baroda (BoB), Punjab National Bank (PNB) and Canara Bank have emerged as top lenders to small businesses under the government’s emergency credit line guarantee scheme (ECLGS). This has helped 1.9 million such units restart their business after the two-month long nationwide lockdown, according to a finance ministry release on Tuesday.
The 100% government-backed collateral-free loan scheme was announced a month ago and was part of the government’s Rs20-trillion financial package to help the poor, revive lending to micro, small and medium enterprises (MSMES) and protect incomes of individuals.
Over two dozen public sector and private lenders have sanctioned more than Rs75,000 crore under the scheme, out of which 44% has been disbursed, as on June 20, the ministry said, adding the steps taken by the government for micro small and medium enterprises (MSMEs) have been ‘gaining rapid traction’.
Out of the bulk disbursed amount, around two third was contributed by the state-owned lenders, data released by the finance ministry showed. As mant as 16 private sector lenders have sanctioned Rs32,687 crore, out of which a third has been disbursed. There are 12 state-owned banks in the list and 52% of the credit sanctioned by them has been disbursed.
A gap in the credit sanctioned and disbursed is an indication of economic activity in the country. A small gap between disbursement and sanction signals uptick in business activity and demand.
The country's largest public sector lender SBI sanctioned Rs16,234 crore, out of which Rs10,960 crore has been disbursed. PNB sanctioned Rs4,800 crore, out of which Rs1,493 crore has been disbursed, data showed. BoB disbursed 30% of the total amount of loans sanctioned—Rs5,666 crore, while Canara Bank disbursed over 50% of the credit sanctioned at Rs4,171 crore.
The government has been prodding banks to increase credit disbursal to support small businesses, as a prolonged nationwide lockdown disrupted businesses and brought economic activity to a standstill. Since the beginning of the month, Sitharaman already met heads of public and private sector banks, as well as non-bank lenders to implement ECLGS to provide liquidity support to small businesses.
The finance ministry also said that under the Reserve Bank of India’s (RBI’s) special liquidity facility announced in March-April, state-owned Small Industries Development Bank of India (SIDBI) has sanctioned over Rs10,220 crore to non-bank lenders and banks for lending to MSMEs and small borrowers.
“NBFCs (non-banking financial companies) and MFIs (micro finance institutions) are being further helped under the extended partial guarantee scheme where approvals have crossed Rs5,500 crore. Transactions for another Rs5,000 crore are under process of approval while certain other deals are currently under negotiation," it said.
