Credit and Finance for MSMEs: 12 public sector banks, 24 private sector banks, and 31 non-banking financial companies have collectively disbursed 35.3 per cent of the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) as of August 24, 2020, according to the government data. Lenders have disbursed Rs 1,05,926 crore as of August 24, 2020, out of Rs 1,55,995 crore sanctioned. The majority deployment of Rs 58,230 crore has been done by PSBs, as per the figures tweeted by Finance Minister Nirmala Sitharaman’s office on Tuesday. Importantly, the number of MSMEs supported stood at 23,77,808 – 52.8 per cent of the 45 lakh MSME units, which the government had said “can resume business activity and safeguard jobs” through the credit offered while announcing the scheme back in May this year as part of the Atmanirbhar package.
Out of nearly 23.78-lakh MSME accounts disbursed, a whopping 86.5 per cent or 20,57,762 accounts were supported by PSBs while private banks offered credit to the remaining 3,20,046 MSME accounts. “While we appreciate the efforts by the government but this needs to expand to nearly 7 crore MSMEs across the country to make them Atmanirbhar. The interest is certainly there among MSMEs to become self-sufficient but the support has to come from the government for not just Covid-hit small businesses but others as well who are also impacted by the pandemic in some way or the other. Nonetheless, there have been few instances where MSMEs have reported challenges in securing credit under the scheme. The government must ensure to remove this on-ground friction between banks and units,” Chandrakant Salunkhe, President, SME Chamber of India told Financial Express Online.
State Bank of India continued to be the leading lender to MSMEs under the ECLGS. The bank has disbursed Rs 17,599 crore in 2,99,375 MSME accounts as of August 24, 2020, followed by Rs 7,621 crore disbursed in 1,73,286 accounts by Punjab National Bank. The third bank in the tally was Canara Bank that disbursed Rs 6,773 crore in 3,91,382 accounts.
FM Sitharaman had announced working capital support of 20 per cent of the outstanding credit for MSMEs as on February 29, 2020, in the form of term loans at a concessional interest rate. Eligible MSMEs are required to have up to Rs 25 crore outstanding and turnover of up to Rs 100 crore. The Department of Financial Services had issued operational guidelines for the ECLGS scheme on May 23 after the approval from the Cabinet on May 20, 2020. The ECLGS Fund was registered on May 26, 2020.