NEW DELHI: The government is doing everything possible to ensure that the liquidity problems of the MSME sector are addressed as a priority under its Emergency Line of Credit Guarantee Program (ECLGS).
As of August 18, 2020, the public sector and private banks have sanctioned loans worth over Rs 1.51 lakh crore under the 100% Emergency Line of Credit Guarantee Program, of which nearly Rs 1.02 lakh crore has already been disbursed.
There has been a big jump in sanctions over the past 15 days. Sanctions have increased rapidly to around Rs 12,000 crore while disbursements have increased to nearly Rs 10,000 crore.
In a tweet, the Ministry of Finance said: “Loans worth more than Rs Lakh cr disbursed under #ECLGS (as of 08/18/2020). ECLGS was announced as part of #AatmaNirbharBharatPackage, to alleviate the distress caused by # COVID19 by providing credit to different sectors, especially MSMEs.
The ECLGS program is the largest fiscal component of the Rs 20 lakh crore autonomous India mission program announced by Finance Minister Nirmala Sitharaman in May.
To ensure that the program achieves its goal of providing adequate liquidity to the MSME segment during the current difficult period, the Ministry of Finance has held regular meetings with banks.
A statement from the Ministry of Finance said that both public and private sector banks have contributed to the success of ECGLS. Loans sanctioned by public sector banks have increased to Rs 76,044.44 crore, of which Rs 56,483.41 has already been disbursed as of August 18.
Likewise, private banks have sanctioned loans amounting to Rs 74,715.02 crore, of which Rs 45,762.36 crore has already been disbursed.
The program is said to help more than 30 lakh units from MSME and other companies restart operations after the lockdown.
As part of the Aatmanirbhar package, the Center had announced its plans for Rs three lakh crore as additional credit to MSMEs and small businesses. These companies were to be able to receive up to 20 percent of their existing borrowings in the form of additional loans at capped interest rates. The loan would be available for units with up to Rs 25 crore in circulation and a turnover of up to Rs 100 crore which accounts are standard.
The units will not have to provide any own collateral or pledge. The amount will be 100% guaranteed by the Indian government, providing total liquidity of Rs three lakh crore to over 45 lakh MSME.