Emergency Credit Line Guarantee Scheme (ECLGS) withdraw by over 25% eligible MSMEs in Punjab

Out of 2 lakh+ bank accounts of eligible micro, small and medium enterprises in Punjab, nearly 25% have withdraw of the central government’s Rs 3 lakh crore ECLGS till date. A total of 22 government as well as private sector banks in Punjab have disbursed Rs 3,635.47 crore to 86,273 MSME accounts till November 5. As on February 29, total loan amount outstanding against MSMEs in Punjab was Rs 30,096.95 crore Announcing the economic stimulus, the Union finance minister Nirmala Sitharaman had on May 13 announced the ECLGS for MSME. This loan is provided by the National Credit Guarantee Trustee Company (NCGTC) to banks, non-banking financial companies (NBFCs) and financial institutions for further disbursement.

According to the Punjab State level Bankers’ Committee (SLBC) data over 55,485 eligible borrower accounts have opted out of the ECLGS. Banks are offering 100% collateral-free loan amount at rate of interest ranging between 7.40% and 9.10% to MSMEs in Punjab under the scheme to cope up with the cash crunch suffered during the Covid-19 pandemic period. Banks in Punjab have not yet received response from a total of 6,965 eligible MSME account owners and in case they do not respond or some of them also opt out, it could further bring down the success rate of ECLGS in the state.

The ECLGS has now been extended till March 2021 with additional credit up to 20% of outstanding loans as on February 29 for entities with outstanding credit up to Rs 50 crore and annual turnover up to Rs 250 crore.

All Industries and Trade Forum President Mr. Badish Jindal said MSME needed the ECLGS but it was marred by late sanction of loans and sick industrial units were not considered by banks. He added,

“These loans should have been disbursed in June-July. Though the banks show sanction of loan under ECLGS in their records but they delay actual disbursement. Their system is cumbersome”.