Government banks pay out ₹16,031 crore to MSMEs

Recently, the Finance Ministry said that public sector banks have disbursed ₹16,031.39 crore till June 12, under the ₹3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, adversely affected following COVID-19. Public sector banks (PSBs) have sanctioned loans worth ₹32,049.86 crore under the 100% ECLGS for the Micro, Small & Medium Enterprise (MSME) sector beginning June 1.

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Key-Points

The scheme is the biggest fiscal component of the ₹20-lakh crore Atmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman last month.

The main objective of the scheme is to provide an incentive to member lending institutions to increase access and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by giving them 100% guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers.

Under the scheme, 100% guarantee coverage will be provided by the National Credit Guarantee Trustee Company (NCGTC) for an additional funding of up to ₹3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of a guaranteed emergency credit line (GECL) facility.

The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the plan to October 31 or till an amount of ₹3 lakh crore is sanctioned under GECL, whichever is earlier.