Guarantees amounting to ₹ 3.61 lakh crore have been issued under the Emergency Credit Line Guarantee Scheme (ECLGS), benefiting 1.19 crore borrowers, the government said.
Union Minister of State for Finance Dr Bhagwat Kisanrao Karad in a written reply to a question in Lok Sabha said that these details were received from National Credit Guarantee Trustee Company Limited (NCGTC), the agency operating the scheme. The figures were till January 31, 2023.
The Emergency Credit Line Guarantee Scheme (ECLGS) was launched in May, 2020 to support eligible Micro, Small and Medium Enterprises (MSMEs) and business enterprises in meeting their operational liabilities and restarting their businesses in the context of the disruption caused by the COVID-19 pandemic. This scheme covers all the sectors of the economy.
The Minister further stated that as per a research report dated January 23, 2023 of the State Bank of India on ECLGS, almost 14.6 lakh MSME accounts, of which about 98.3% of the accounts were in the micro and small enterprises categories, were saved. In absolute terms, MSME loan accounts worth Rs. 2.2 lakh crore improved since inception of ECLGS for entire banking industry. This means that around 12% of the outstanding MSME credit has been saved from slipping into non-performing asset (NPA) classification due to ECLGS.
Further, the Minister stated that the Economic Survey 2022-23 states that the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector has been remarkably high, over 30.6 per cent, on average during Jan-Nov 2022, supported by the extended Emergency Credit Line Guarantee Scheme (ECLGS) of the Government of India. It adds that the recovery of MSMEs is proceeding apace, as is evident in the amounts of Goods and Services Tax (GST) they pay, while the ECGLS is easing their debt servicing concerns.
Giving out more information, the Minister stated that the incidence of NPAs in lending by banks, including in the MSME sector, is attributable to a number of factors, which include macroeconomic conditions, sectoral issues, global business environment, governance issues in the borrowing entities, etc. Measures taken to support MSMEs are intended to enhance credit flow to the sector and improve the overall credit health of businesses in the sector. Various measures have been taken for increasing access to credit and finance for MSMEs in an affordable manner.