PSBs disburse loans to MSMEs worth Rs 16,031 cr under emergency credit guarantee scheme

New Delhi, Jun 17 (KNN) Public Sector Banks (PSBs) have disbursed Rs 16,031.39 crore till June 12, under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, adversely affected due to COVID-19 crisis, said the Finance Ministry.

Public sector banks (PSBs) have sanctioned loans worth Rs 32,049.86 crore under the 100 per cent ECLGS for the MSME sector starting June 1. The scheme is the biggest fiscal component of the Rs 20-lakh crore Atmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman last month.

“As of 12 June 2020, #PSBs have sanctioned loans worth Rs 32,049.86 crore under the 100% Emergency Credit Line Guarantee Scheme, out of which Rs 16,031.39 crore has already been disbursed,” Sitharaman said in a tweet.

Last month, Finance Minister Nirmala Sitharaman had announced the ECLGS, for the hard-hit MSME sector, which is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package.

Under the scheme, 100 per cent guarantee coverage will be provided by National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 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.

The government will also provide a corpus of Rs 41,600 crore for the scheme over the current and coming three financial years.

'The main objective of the Scheme is to provide an incentive to Member Lending Institutions (MLIs), i.e., Banks, Financial Institutions (FIs) and Non-Banking Financial Companies (NBFCs) to increase access to, and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by providing them 100 per cent guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers,'' the government said.

'The collateral free loans are for those with Rs 25 crore outstanding loan or Rs 100 crore turnover. The tenure of the loan will be 4-year and moratorium of 12 months,' said Finance Minister Nirmala Sitharaman.