With four more months left for the deadline, banks have sanctioned 36.7 per cent of the targeted Rs 3 lakh crore under the Emergency Credit Line Guarantee Scheme (ECLGS) scheme for stressed micro, small and medium enterprises (MSMEs), as per Finance Ministry data.
As per the scheme, banks can lend Rs 3 lakh crore till October 31, 2020, of which Rs 1.10 lakh crore has already been already sanctioned by banks to 34.69 lakh borrowers till July 1, according to official data. However, disbursals lag at 47 per cent of the sanctions at Rs 52,255 crore to 14.03 lakh borrowers as of July 1. This works out to 17.41 per cent of the Rs 3 lakh crore target.
After a slow start, private banks are slowly catching up by sanctioning Rs 47,108 crore to 4.19 lakh borrowers under the package. The current pattern of loan disbursals indicates that private banks are opting for bigger loans of around Rs 13 lakh per borrower, while public sector banks prefer small loans in the range of Rs 2.5 lakh to Rs 3.50 lakh per customer.
Private banks have disbursed Rs 18,906 crore under the package to 1.45 lakh borrowers as of July 1, according to official data. Of the total sanctions of Rs 1,10,343 crore, public sector banks sanctioned Rs 63,234 crore to 12.58 lakh borrowers. However, average disbursement per borrower by private banks was Rs 13.07 lakh, while PSU banks disbursed an average of Rs 2.65 lakh per borrower.
Among states, Maharashtra received the maximum loans from PSU banks, with 2.62 lakh borrowers getting sanction letters for Rs 6,578 crore loans. Of this, Rs 3,310 crore has been disbursed to 94,377 borrowers so far. In Tamil Nadu, MSME loans worth Rs 6,390 crore have been sanctioned to 3.21 lakh borrowers while 1.26 lakh customers got Rs 3,695 crore disbursements so far. In Uttar Pradesh, total sanctions were Rs 6,001 crore and disbursements at Rs 3,259 crore.
State Bank of India (SBI) has sanctioned loans worth Rs 20,281 crore and disbursed Rs 12,885 crore. Canara Bank sanctioned Rs 8,237 crore and disbursed Rs 4,342 crore. Though the government has given guarantees on repayment, private banks initially had a lacklustre start.
Kotak Mahindra Bank Vice-Chairman and MD Uday Kotak recently admitted that private banks have started a little slow, but assured that in the next few weeks there would be significant flow of credit from private sector banks under the scheme — both in terms of loans sanctioned and disbursed.
Many private banks were pushing for relaxation in the eligibility conditions for the government’s MSME package in view of the revision in turnover limit for MSMEs from Rs 100 crore to Rs 250 crore. Bankers and industry bodies have already taken up the issue with the government.
SBI Chairman Rajnish Kumar said the new definition of MSMEs, which included both turnover and investment limits, has made things simpler and will lead to improved flow of credit to the sector. “SBI is the largest lender to the sector and is increasingly utilising digital technology platforms to enable hassle free credit flow to the MSME industries,” Kumar said while addressing the MSME meet organized by the CII.
Under the scheme, 100 per cent guarantee coverage will be provided by National Credit Guarantee Trustee Company (NCGTC).
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