Credit and financing for MSMEs: Loans amounting to Rs 3.32 lakh crore have been sanctioned under the Emergency Line of Credit Guarantee Scheme (ECLGS) till April 30, 2022, including an amount of Rs 2.54 lakh crore has been disbursed, the Reserve Bank of India (RBI) said in its latest financial stability report. . Drawdown under ECLGS 1.0, 2.0 and its extension accounted for more than 97% of total guarantees issued. Launched on May 20, 2020, Rs 5-lakh-crore ECLGS provided 100% guarantee cover from the National Credit Guarantee Trustee Company Limited (NCGTC) to certain borrowers. It was originally designed for MSMEs and corporates whose total fund-based credit outstanding across all lending institutions reached Rs 25 crore.
Private banks have shown a greater appetite than public banks to use different versions of ECLGS. According to the data, Rs 95,700 crore was disbursed to new borrowers and Rs 34,600 crore to recurring borrowers by private banks compared to Rs 79,800 crore to new borrowers and Rs 18,300 crore to recurring borrowers by public banks. On the other hand, NBFC had disbursed Rs 20,800 crore to new borrowers and Rs 7,700 to regular borrowers.
In terms of number of borrowers, private banks extended credit to 67.61 lakh new borrowers, compared to 22.65 lakh new borrowers supported by public sector banks. However, the number of repeat borrowers remained similar for public banks at 1.02 lakh and private banks at 78,000, while NBFCs had supported 95,000 repeat borrowers and 11.35 lakh new borrowers, according to the data. .
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ECLGS has gone through several iterations through ECLGS 1.0, ECLGS 1.0 (Extension), ECLGS 2.0, ECLGS 2.0 (Extension), ECLGS 3.0, ECLGS 3.0 (Extension), and ECLGS 4.0 since its launch. The validity of the ECLGS has been extended until March 31, 2023, or until guarantees in the amount of Rs 5 lakh crore are issued.
In terms of asset quality, while the aggregate gross ratio of non-performing assets (GNPA) of public and private banks in the MSME sector increased from 11.3% in September 2021 to 9.3% in March 2022, it still remains relatively high, the report noted. In addition, the restructured MSME portfolio of Rs 46,186 crore, which accounts for 2.5% of the total advances under the May 2021 Resolution 2.0 framework, has the potential to create tensions in the sector, warned RBI in the report.