Banks have sanctioned 43.5 per cent of the targeted Rs 3 lakh crore under the Emergency Credit Line Guarantee Scheme (ECLGS) for stressed Micro, Small and Medium Enterprises (MSMEs) as on July 23, with sanctions and disbursements rising sharply over the last few weeks, official data show.
Two months after the launch of the scheme, cumulative loan sanctions have risen to Rs 1.30 lakh crore from Rs 1.10 lakh crore on July 1, with both private and state-owned banks stepping up credit deployment, according to most recent data.
Disbursements as a proportion of the total amount was 27.35 per cent at Rs 82,065 crore as on July 23, up from 17.41 per cent or Rs 52,255 crore as on July 1.
Sharp rise in sanctions, disbursals
Sanctions and disbursements under collateral-free MSME loans scheme have picked up pace with private banks joining state-owned lenders in expanding credit deployment. Along with other measures aimed at timely clearance of dues, the scheme seems to be helping in improving the liquidity position of MSMEs, enabling them to survive the economic downturn.
Under the ECLGS scheme, banks are offering up to Rs 3 lakh crore of government-guaranteed loans — an extra 20 per cent of outstanding loans to their MSME borrowers that are non-NPA. With a little over three months still to go, the scheme is on course to meet the Rs 3 lakh crore target, a top source in the banking industry said.
Average disbursement per loan account by private banks is nearly 5.6 times that of state-owned banks.
Launched on May 23, the scheme is open until October 31 or until Rs 3 lakh crore has been is sanctioned, whichever is earlier. All MSME borrower accounts with combined outstanding loans of up to Rs 25 crore as on 29.2.2020, and annual turnover of up to Rs 100 crore in FY 2019-20, are eligible under the scheme.
For banks and financial institutions, the interest rate has been capped at 9.25 per cent, while for NBFCs it is 14 per cent. 100 per cent guarantee coverage will be provided by National Credit Guarantee Trustee Company (NCGTC).
Of the total sanctioned amount of Rs 1.30 lakh crore as on July 23, private sector banks have sanctioned loans worth Rs 58,673 crore; the remaining Rs 71,818 crore has been sanctioned by public sector banks. Private sector lenders have focussed on larger accounts.
Disbursement by private sector banks stood at Rs 34,433 crore; for public sector banks at Rs 47,631 crore. Average disbursement per borrower by private banks was Rs 14.95 lakh, while PSU banks disbursed an average of Rs 2.66 lakh per borrower.
A total 38.19 lakh accounts have been sanctioned loans, while disbursements have been made to 20.16 lakh accounts. The government has targeted 45 lakh units for support under the scheme.
State Bank of India has disbursed the highest amount of Rs 15,112 crore, followed by Canara Bank (Rs 5,796 crore), Punjab National Bank (Rs 5,295 crore) and Bank of Baroda (Rs 4,947 crore).
To promote timely clearance of the dues of vendors, especially MSMEs, the government has decided to levy interestSunny Verma on late payment on the government e-marketplace (GeM) for all procurements from October 1 onwards. Under the GeM procurement rules, buyers must make payments within 10 days of the generation of consignee receipt and acceptance certificate.
The government has also barred global procurement tenders up to Rs 200 crore in order to support local enterprises and MSMEs. Contractors have been given extensions of up to 6 months to complete their obligations by all central agencies including the Railways, CPWD, etc.
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