ECLGS scheme kept Rs 2 trn MSME loans from going bad: SBI report

It is about 12 percent (Rs 2.2 trillion) of the expenditure The debt has been saved from moving into bad loans because of the Emergency Credit Line Guarantee Scheme (ECLGS) launched by the government during the epidemic, saving 16.5 million jobs until November, 2022, approximately and State Bank of India rates.

“Out of 1.46 million (Micro, Small and Medium Enterprises) saved as a result of ECLGS, nearly 93.8 percent were in the micro and small sectors. The trade sector (Kirana shops, etc.) has been the most successful, followed by food production, textiles and commercial real estate,” the report of the Economic Research Department of the SBI.

A similar SBI report released in January 2022 said Loans amounting to Rs 1.8 million (14 percent) were saved from default in the period up to November 2021, preventing 15 million workers from becoming unemployed.

The ECLGS launched in May, 2020 aims to support MSMEs and business enterprises in meeting their operational obligations and restarting their businesses. Under the scheme, 100 percent credit guarantee is provided to the lending institutions for the loans they advance under the program to people who qualify to borrow money. The approved approval limit under the program has been raised from Rs 4.5 trillion to Rs 5 trillion.

MSME sectors have increased with economic growth, increasing their ability to raise funds through (non-bank) credit markets.

“Starting FY22, there is evidence of growth in MSME units with many units crossing the threshold of Rs 250 crore turnover and converting many companies to through the new definition of MSME units. This shows the integration of MSME units with large sales volumes while the PLI (Production Linked Incentive) movement is underway,” o the report shows.

In 2020, the government announced the revision of the criteria for the classification of MSMEs, changing from investment in manufacturing and machinery to investment and sales.

According to the SBI report, Udyam Assist Platform (UAP) which was announced recently can bring 50 million Informal Micro Enterprises (IME) into the formal and priority sector of bank loans. . “The provision of IMEs within the framework of the formal credit system will result in small companies with a large number of employees enrolling. (This) will strengthen jobs, ensure credit expansion (and) set the framework for formal credit systems,” it added.

According to the report, the MSME sectors that experienced a sudden economic crisis were edible oil, printing, consumer goods, pharmaceuticals, jute, aviation, and many others, while the sectors of cement, petrochemicals, fertilizers, telecom and roads that have not been fully restored. from disease.

Delhi, Karnataka, Tamil Nadu and Maharashtra are among the states that have recovered from the disease in terms of credit disbursements to the MSME sector as on March 31, 2022 from their previous level (March 31, 2018). “These are the states where the number of Covid cases is very high,” the report said.

Chattisgarh, Madhya Pradesh and Punjab are the states where MSME debt is lower than March-18 levels before the pandemic hit. “However, almost all states are on the road to recovery and will soon cross the first stage of the epidemic by the end of 2022-23,” said a the report.

According to the report, the government needs to guarantee loans for providing credit to the MSME sector. “Many of the credit stabilization programs that are currently underway pose a number of risk factors specifically for MSMEs. For example, CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) and NCGTC (National Credit Guarantee Trustee Company) offer credit guarantee products for MSMEs, although the guarantee structure and features are different” , this is the story.

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