Govt may allow co-operative banks to lend under ECLGS scheme for MSMEs

The government is likely to include cooperative banks as a lending institution under the Emergency Credit Line Guarantee Scheme.

   

As per reports, the government is likely to include cooperative banks as a lending institution under the Emergency Credit Line Guarantee Scheme (ECLGS) that was announced to support stressed micro, small and medium enterprises (MSMEs).

The MSME minister Nitin Gadkari has said that the finance minister will take a decision soon. The minister quoted, “The finance minister has explained that due to the dual regulation and supervision, cooperative banks are not included as member lending institutions (MLIs) under ECLGS. However, data regarding their financial position is being collected from scheduled state cooperative banks and urban cooperative banks to include them as MLIs for the scheme, in consultation with Reserve Bank of India (RBI), depending on availability of headroom of the scheme.”

At present, all public sector and private sector banks and non-banking financial companies (NBFCs) have extended loans under ECLGS. ECLGS is part of the government’s ₹20-trillion financial package to help the poor and small businesses tide over the covid-19 crisis, by providing them additional funding of up to ₹3 trillion. Nitin Gadkari has said that since the disbursement is only ₹1.2 trillion, compared to the target of ₹3 trillion, cooperative banks can be allowed to lend under the scheme.Cooperative institutions play a crucial role in financial inclusion in both rural and urban India.

The MSME minister said as far as the issue of delayed payments to MSMEs is concerned, he has urged all ministries, departments and state-owned companies to clear pending bills of all small businesses within 45 days, and the MSME ministry is closely monitoring all the complaints lodged on the Software Application for Monitoring And Disposal, Handling of Industrial Disputes, or SAMADHAN portal.

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