Tag: Emergency Credit Line Guarantee Scheme

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MSME

Emergency Credit Line Guarantee Scheme 2.0 Now Extended to SMA-1 Borrowers

ECLGS Now Applicable to SMA-1 | Representational Image
ECLGS Now Applicable to SMA-1 | Representational Image

The Department of Financial Services said in a tweet that the scope of Emergency Credit Line Guarantee Scheme (ECLGS) 2.0 has now been extended to cover the Special Mention Accounts- 1 (SMA). The DFS took to Twitter and wrote, “Scope of ECLGS 2.0 expanded! SMA-1 borrowers in the healthcare sector and 26 other high stress sectors (as identified by the Kamath Committee) are now eligible under ECLGS 2.0.” The Emergency Credit Line Guarantee Scheme 2.0 was launched by the government to help the business, especially firms in the micro, small and medium sector in wake of coronavirus pandemic last year. Emergency Credit Line Guarantee Scheme: What is ECLGS? Are You Eligible? Know All About It.

The scheme comprises all micro, small and medium borrowers accounts with combined outstanding loans across all MLIs (member lending institution) of up to Rs 50 crore in any sector and up to Rs 500 crore in respect of borrowers in the hospitality sector, travel and tourism sector and leisure and sporting sector and classified as regular, Special Mention Accounts-0 or Special Mention Accounts-1 as on February 29, 2020, according to the scheme’s website. MSME Credit Moves Towards Pre-Pandemic Levels, Witnesses a Growth of 5.7%: Report.

The Special Mention Accounts (SMA) are those which are exhibiting signs of incipient stress resulting in the borrowers defaulting in timely servicing of their debt and borrowing obligations, though the accounts have not yet been classified as Non Performing Assets (NPAs) according to the guidelines issued by the Reserve Bank of India. In the case of Special Mention Accounts-1, the overdue period is between 31 to 60 days.

The amount of Emergency Credit line to be extended to Business Enterprises or the firms in the micro, small and medium enterprises would be upto 20 per cent of total outstanding as on Feb 29,2020. The interest rate charged on such borrowing is capped at 9.25 per cent for banks and 14 per cent for the Non-Banking Financial Corporations (NBFCs). It has a maximum tenure of four years from the date of disbursement and the moratorium period on the principle amount is 12 months.

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MSME

MSME Credit Moves Towards Pre-Pandemic Levels, Witnesses a Growth of 5.7%: Report

MSME Credit Grows at 5.7% | Representational Image (Photo Credits: Pixabay)
MSME Credit Grows at 5.7% | Representational Image (Photo Credits: Pixabay)

The latest MSME Pulse Report by TansUnion CIBIL shows that the credit in the Micro, Small and Medium Enterprises have witnessed a growth owing to the support of central government’s Emergency Credit Line Guarantee Scheme (ECLGS). As per the recent report, the MSME credit grew by 5.7 per cent YoY and around 3.5 QoQ in September 2020. The report also indicated that the Public Sector Banks are progressively taking the lead in providing quick loans and credits to the MSME sector, thereby ensuring an increased market share for themselves. Not only the PSBs, even the private sector banks are moving back to the pre-COVID-19 levels, with 22 per cent YoY growth in inquiries in December 2020. For the public sector banks, the same was recorded at 9 per cent. Indian SMEs Plan To Expand Businesses As Economy Revives, Restoration of Business Activities Likely To Gain Momentum Post COVID-19 Era: Survey.

Meanwhile, the inquiry trends in Commercial credit touched pre-COVID levels of 13 per cent in December 2020 after experiencing a sharp plunge in April 2020 owning to the coronavirus outbreak and the subsequent economic lockdown. The total on-balance sheet commercial lending exposure in India stood at Rs 71.25 Lakh Crore with a growth rate of 2.1 per cent YoY as in September 2020. As per report, for MSME sector it stood at Rs 19.09 Lakh Crore with a yearly growth rate of 5.7 per cent in all the sub segments of micro, small and medium enterprises. The Centre released the 17tth Installment of GST Compensation: What it means for States & UTs?

As per the MSME Pulse Report, the high risk MSME borrowers with a CIBIL rank between 7 to 10 secured the maximum benefits from the rise in approval rates. Meanwhile, the NPA (Non-Performing Asset) ratio saw a decline to 12.1 per cent in September 2020. It is being reasoned as a consequence of the Supreme Court order of not declaring NPAs till further notice. Moreover, as per a finance ministry release, total loans sanctioned under ECLGS stand at Rs 2.1 Lakh Crore of which Rs 1.65 Lkah Crore has already been disbursed.

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MSME

Credit Guarantee Scheme For MSME Sector Unlikely to be Extended Beyond October 2020

Currency (Photo Credits: Pixabay) Representational Image

New Delhi, October 19: The Narendra Modi government is unlikely to extend the Rs 3 lakh crore-Emergency Credit Line Guarantee Scheme (ECLGS) for MSME sector beyond October. According to a PTI report, this scheme is meant to provide financial support to businesses, primarily Micro, Small and Medium Enterprises (MSMEs), impacted by slowdown triggered by the coronavirus pandemic.

As per sources quoted in the report, the decision to not extend the ECLGS scheme has been taken even though the sanctioned amount so far is only nearly 65 per cent of the target.

On August 1, the government widened the scope of the Rs 3 lakh crore-scheme by doubling the upper ceiling of loans outstanding and including certain loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit.

The objective of the scheme is to provide support to all those affected in the coronavirus pandemic and if there are no takers for the scheme, then the scheme won’t be extended even though there is some room left.

On August 1, the government widened the scope of the Rs 3 lakh crore-scheme by doubling the upper ceiling of loans outstanding and including certain loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit.

 

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MSME

Credit Guarantee Scheme: Banks Sanction Rs 1.86 Lakh Cr to 50 Lakh MSMEs Impacted by Slowdown Amid COVID-19 Pandemic

New Delhi, October 17: The Finance Ministry announced that banks have sanctioned loans of about Rs 1.86 lakh crore to 50 lakh business units under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, those who have been affected by a slowdown due to the coronavirus pandemic. According to a report by PTI, over 27 lakh MSME units have received about Rs 1,32,246 crore till September 29.

Emergency Credit Line Guarantee Scheme is part of the fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package that was announced to lessen the stress caused by the lockdown due to coronavirus pandemic.

The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till the amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier.

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Finance MSME

Finance Ministry Sanctions Rs 1.61 Lakh Crore Worth of Bank Loans to MSMEs Under ECLGS to Battle COVID-19 Pandemic

Union FM Nirmala Sitharaman, with other Finance Ministry officials. (Photo Credit: PIB)
Union FM Nirmala Sitharaman, with other Finance Ministry officials. (Photo Credit: PIB)

New Delhi, September 8: Union Finance Minister Nirmala Sitharaman on Monday announced that the Central government had so far sanctioned loans amounting to Rs 1.61 lakh crore to MSMEs under the Emergency Credit Line Guarantee Scheme (ECLGS). The amount has been sanctioned as a component of the Rs 20-lakh crore Self-Reliant India Mission package, announced by FM Sitharaman in May 2020 for firms to tackle the economic effect of COVID-19 pandemic.

Informing about the update, the Union Finance Minister took to Twitter and wrote, “As of 03 Sept 2020, the total amount sanctioned under the 100% Emergency Credit Line Guarantee Scheme by #PSBs and private banks stand at Rs 1,61,017.68 crore, of which Rs 1,13,713.15 crore has already been disbursed.”

Adding more, Sitharaman wrote, “Compared to 24 Aug 2020, there is an increase of Rs 5,022.06 crore in the cumulative amount of loans sanctioned & an increase of Rs 7,786.16 crore in the cumulative amount of loans disbursed by both #PSBs and private sector banks combined as on 03 Sept 2020.”

Here’s what the Finance Minister’s office tweeted:

Among other details, the Finance Minister said that public sector banks have so far sanctioned Rs 78,067.21 crore under the ECLG scheme, and Rs 62,025.79 crore has been disbursed as of September 3, 2020. She added that the Union Finance Ministry regularly held review meetings with the banks to ensure that the scheme achieves its objective of providing adequate liquidity to the MSME segment during the current difficult period.

As per government estimate, the ECLG scheme would benefit more than 30 lakh units of MSMEs and other businesses to restart their businesses after the COVID-19 lockdown. It is to be known that the government had announced its plans for Rs 3 lakh crore as an additional credit to MSMEs and small businesses under Aatma Nirbhar package.

Under the scheme, the loans would be available to units — whose accounts are standard — with up to Rs 25 crore outstanding and turnover of up to Rs 100 crore. However, these firms will not have to provide any guarantee or collateral of their own as it will be 100 per cent guaranteed by the government and a total liquidity of Rs 3 lakh crore to more than 45 lakh MSMEs will be provided.