The emergency credit line guarantee scheme (ECLGS) launched by the government amid the COVID-19 pandemic helped 13.5 lakh MSME units, saved 1.5 crore jobs and prevented 14% of MSME loans from turning into non-performing assets (NPAs), says a SBI Research study.
“We estimate, almost 13.5 lakh micro, small and medium enterprises (MSMEs) accounts were saved due to ECLGS (including restructured). Almost 93.7 per cent of such accounts are in the micro and small category,” says SBI Research. In absolute terms, the report claimed MSME loan accounts worth Rs.1.8 lakh crore were saved from slipping into NPA during the period and this is equivalent to 14 per cent of the outstanding MSME credit being saved from becoming NPA.
The scheme is the biggest fiscal component of the Rs.20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May 2020, to mitigate the distress caused by the COVID-19-induced lockdown by providing credit to different sectors, especially MSMEs.
Amongst the states, Gujarat has been the biggest beneficiary, followed by Maharashtra, Tamil Nadu and Uttar Pradesh.
Under the scheme, 100 per cent guarantee coverage is being provided by the National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs.4.5 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of a guaranteed emergency credit line (GECL) facility.
For this purpose, a corpus of Rs.41,600 crore was set up by the government, spread over the current and next three financial years.