Finance minister reviewed progress of Rs 3 lakh crore credit guarantee scheme for MSMEs
Parul June 10, 2020
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As per news reports, Finance Minister Nirmala Sitharaman held a review meeting on credit guarantee scheme with heads of public sector banks, and asked them to expedite loan disbursement under the Rs 3-lakh crore ECLGS for MSME sector, hit hard by coronavirus-induced lockdown.
The meeting on Emergency Credit Line Guarantee Scheme (ECLGS) was held through a video conference, and the minister appreciated the efforts of banks in execution of the scheme.
Finance minister complimented PSBs on rapid traction for achieving sanctions of Rs 20,000 crore under ECLGS. The minister also advised to maintain proactive outreach.
Meanwhile, as of 8 June 2020, the PSBs have sanctioned loans worth Rs 1,109.03 crore for MSME hubs in 12 States under the 100 per cent Emergency Credit Line Guarantee Scheme, of which Rs 599.12 crore has already been disbursed to 17,904 accounts”.
The scheme is the biggest fiscal component of the Rs 20 lakh crore Self-Reliant India Mission package announced by Sitharaman last month. In fact, on May 21, the cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for the MSME sector.
Under this scheme, 100 per cent guarantee coverage are being 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 main objective of the scheme is to provide an incentive to member lending institutions to increase access and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by giving them 100 per cent guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers.