Centre's ECLG scheme saved 12 pc of outstanding MSME credit from slipping into non-performing assets: SBI Research
Jan 23, 2023
New Delhi [India], January 23 : Incentives provided by the central government's Emergency Credit Line Guarantee Scheme (ECLGS) have helped in boosting credit flow to MSMEs and 12 per cent of the outstanding MSME credit has been saved from slipping into non-performing assets (NPAs), said SBI Research in its latest Ecowrap report.
According to SBI Research's analysis, at least 14.6 lakh MSMEs accounts were saved due to the emergency credit guarantee scheme.
"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 per cent of the outstanding MSME credit has been saved from slipping into NPA because of the ECLG scheme," the Ecowrap report authored by Group Chief Economic Adviser of State Bank of India Soumya Kanti Ghosh said, adding that it may have saved the livelihood of 6.6 crores.
Further, it said there is clear evidence MSME units are becoming larger with several units crossing the threshold of Rs 250 crores turnover and turning mid-sized corporates.
"This reveals the integration of MSME units with larger value chain as production-linked incentive activity is getting momentum," the report said.
Moreover, on India's total number of MSME units, the report said the country has less than half the number of MSMEs compared to China (64 million against 140 million Chinese enterprises).
"(Of them) more than 99 per cent are in the micro category and would need substantial hand-holding to grow organically. This could result in an MSME revolution in India...," the report added.
The Emergency Credit Line Guarantee Scheme (ECLGS) was launched in May 2020 as part of Aatmanirbhar Bharat initiative to support eligible Micro, Small and Medium Enterprises (MSMEs) and business enterprises in meeting their operational liabilities and restarting their businesses.
ECLGS covers all the sectors of the economy and a 100 per cent guarantee is provided to Member Lending Institutions (MLIs) in respect of the credit facility extended by them under the scheme to eligible borrowers.
The Union Cabinet had in August last year approved the enhancement in the limit of Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 50,000 crore from Rs. 4.5 lakh crore to Rs 5 lakh crore, with the additional amount being earmarked exclusively for enterprises in hospitality and related sectors.
The increase was made on account of the severe disruptions caused by COVID-19 pandemic on hospitality and related enterprises.
