In May 2020, the Emergency Credit Lines (ECLGS) program was launched under the Aatmanirbhar Bharat Abhiyan to support eligible micro, small and medium enterprises (MSMEs) and business enterprises in meeting their operational obligations and restarting business in the context of the disruption caused by the COVID pandemic -19. This regime covers all sectors of the economy. This was stated by Union Minister of State for Finance Dr Bhagwat Kisanrao Karad in a written reply to a question in the Lok Sabha today.
ECLGS benefiting 1.19 crore borrowers
According to information received from National Credit Guarantee Trustee Company Limited (NCGTC), the Minister said that as on 31/01/2023, the scheme operating agency has issued guarantees of Rs 3.61 crore under ECLGS benefiting 1.19 crore borrowers. Details of Government Micro, Small and Medium Enterprises (MSME) loans guaranteed under the scheme are attached as ANNEXURE I to this reply.
The Minister further said that as per the State Bank of India research report on ECLGS dated 23.1.2023, nearly 14.6 lakh MSME accounts have been rescued, of which about 98.3% of the accounts were in the micro and small enterprise categories. In absolute terms, MSME credit accounts worth Rs. Since the establishment of ECLGS, the entire banking sector has improved by 2.2 million crores. This means that around 12% of outstanding MSME credit has been saved from slipping into non-performing asset (NPA) classification thanks to ECLGS.
The minister further said that the Economic Survey 2022-23 indicated that credit growth to the micro, small and medium enterprises (MSME) sector was remarkably high, averaging over 30.6 per cent during January-November 2022, supported by the expanded emergency guarantee scheme loans (ECLGS) of Govt of India. He adds that the recovery of SMEs is progressing rapidly as evidenced by the amount of Goods and Services Tax (GST) they are paying, while ECGLS is allaying their debt service concerns.
Giving further information, the Minister said that the occurrence of NPAs in lending by banks, including the SME sector, can be attributed to a number of factors, which include macroeconomic conditions, industry issues, global business environment, governance issues in lending entities. , etc. The measures taken to support SMEs are to improve the flow of credit to the sector and improve the overall credit health of businesses in the sector. Various measures have been taken to increase access to credit and finance for SMEs in an affordable manner. These include, but are not limited to:
New revised criteria for classifying SMEs based on investment size and turnover.
Pradhan Mantri Mudra Yojana (PMMY) launched in April 2015 to provide free access to institutional finance to unfunded micro/small business units with free loans up to Rs10 lakh. Following the Covid-19 pandemic, the Emergency Credit Lines Program (ECLGS) was launched in May 2020 to support eligible micro, small and medium enterprises (MSMEs) and commercial enterprises in meeting their operational obligations and restarting business.
The psbloansin59minutes portal was launched to facilitate in-principle approval of loans up to Rs 5 crore for SMEs without human intervention. The Trade Receivables Accounting System (TReDS) was launched to address the problem of late payments to SMEs.
For better transmission of monetary policy, RBI has advised banks to link all new floating rate loans to an external benchmark for small and medium enterprises from 01.10.2019 and for medium enterprises from 01.04.2020.
A special restructuring window has been introduced for small and medium-sized enterprises through: Resolution Framework-I, announced in August 2020, which allowed restructuring to be implemented by March 2021; and Resolution Framework II announced in May 2021, which allowed restructuring to be triggered by 30 September 2021 to be completed within a 90-day deadline.
A target of 7.5 per cent of Adjusted Net Bank Credit (ANBC) or credit equivalent of off-balance sheet exposure amount, whichever is higher, is fixed for Scheduled Commercial Banks (SCBs) for lending to micro enterprises under priority sector lending norms.
Written by: Vaishali Verma