Finance Minister Nirmala Sitharaman on Monday held a meeting with the heads of major private sector banks, and asked them to ensure effective rollout of Rs 3-lakh crore ECLGS for the MSME sector, hit hard by coronavirus-induced lockdown.
The meeting -- also attended by CEOs of major non-banking financial companies (NBFCs) -- on Emergency Credit Line Guarantee Scheme (ECLGS) was held through a video conference.
The finance minister chaired a meeting through video conference with major private banks and NBFCs to ensure effective roll out of ECLGS and uninterrupted/ smooth liquidity to Indian MSMEs in this difficult time. Debasish Panda, Secretary, Department of Financial Services, was also present in the meeting, the finance ministry said in a tweet.
As of June 11, public sector banks have sanctioned loans worth Rs 29,490.81 crore under the 100 per cent Emergency Credit Line Guarantee Scheme. Out of this Rs 14,690.84 crore has already been disbursed.
The scheme is the biggest fiscal component of the Rs 20-lakh crore Self-Reliant India Mission package announced by Sitharaman last month.
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 the 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.
For this purpose, a corpus of Rs 41,600 crore was provided by the government, spread over the current and next three financial years.
The scheme is applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till an amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier.
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.
All MSME borrower accounts with an outstanding credit of up to Rs 25 crore as on February 29, which were less than or equal to 60 days past due as on that date, i.e., regular, SMA-0 and SMA-1 accounts, and with an annual turnover of up to Rs 100 crore, are eligible for GECL funding under the scheme.