October 8, 2020 3:09:09 am
Banks have sanctioned 62.15 per cent of the targeted Rs 3 lakh crore under the Emergency Credit Line Guarantee Scheme (ECLGS) for stressed MSMEs while disbursements were at 44.08 per cent of the total amount as of September 29, up from 47.7 per cent sanctions and 32.9 per cent disbursements recorded as on August 12. Launched on May 23, ECLGS is open until October 31 or until Rs 3 lakh crore has been sanctioned, but the scheme can be extended unless full amount is sanctioned.
As of September 29, 12 public sector banks, 24 private banks and 31 non-banking financial companies (NBFCs) sanctioned Rs 1.86 lakh crore under the scheme, of which Rs 1.32 has been disbursed to 27.09 lakh borrowers, government data shows. The amount of loan sanctions by private banks was higher when compared to state-owned lenders for the first time since the launch of the scheme. While public sector banks (PSBs) sanctioned loans of Rs 81,180 crore, private bank sanctions were Rs 95,060 crore. Disbursals by public sector and private banks were at Rs 67,393 crore and Rs 60,740 crore, respectively.
Of the total 27.09 lakh loan accounts which received disbursement under the scheme, PSBs catered to 22.10 lakh accounts— or 81.57 per cent of total accounts — while private sector banks served 3.77 lakh customers or 13.91 per cent of total accounts. NBFCs disbursed Rs 4,111 crore to the remaining 1.21 lakh accounts. Share of disbursement by state-owned banks has come down from around 90 per cent in earlier months, while private banks and NBFCs have stepped up lending.
According to a survey published by the National Institute of Bank Management (NIBM), last month, micro enterprises have been the biggest beneficiary of the government-backed ECGLS, but it has been used mostly for immediate liquidity support, rather than business growth. The finance ministry had on August 4 allowed individuals to access loan facility for existing business loans.
The survey on impact assessment of ECLGS also highlighted various concerns that need to be addressed — disbursement patterns being unequal as a large proportion of borrowers have received a small share of the total loan; low utilization rate for the smallest borrowers and manufacturing firms.
It showed that 86.53 per cent of total loans disbursed by PSBs have been given to micro businesses in comparison to 5.38 per cent loans to small businesses, 0.73 per cent to medium enterprises and 7.35 per cent to other businesses. A similar pattern is visible in loans given by private banks and NBFCs.
The Rs 3 lakh crore worth of ECLGS scheme provides additional 20 per cent collateral-free credit to MSMEs fully guaranteed by the central government against loan losses. Though under the ECLGS the banks are not supposed to take any collateral from the borrowers it allows extension of charge on security for the existing loans, which involves documentation and registration & stamp duty charges, the report noted.
Private banks and NBFCs continue to focus on large accounts, with average disbursement per account at Rs 16.08 lakh for private lenders, while public sector banks’ average disbursement per account stood at Rs 3.05 lakh.
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