Public sector banks accounted for the largest share of loans disbursed under the ECLGS scheme under which the government guarantees a certain amount of loans to MSMEs, with private sector banks coming close. But the public sector banks reached more to the tiny borrowers, finds a study by credit bureau Transunion Cibil.
Of the total loan applications received under the ECLGS scheme, the share of public sector banks is about 47%. While that of private sector banks is 44 per cent. But the public sector banks have reached out more to the tiny borrowers who have accounted for 58 per cent of the number of loans disbursed, finds the study by the credit bureau.
Under the Emergency Credit Line Guarantee Scheme (ECLGS) MSMEs get up to 20% of the borrower’s total outstanding credit up to Rs. 25 crore is fully guaranteed by the government. This is a part of the Rs 20 lakh crore package to help the industries hit by the COVID induced lockdown.
Public sector banks with their extensive network operationalized the scheme as soon as it was launched. This enabled the scheme to reach out to a maximum number of MSME borrowers spread across the length and breadth of the country, within a short time, the study said.
“Public sector banks led from the front on the implementation of ECLGS. They efficiently channeled credit infusion to deserving MSMEs in a timely manner by astutely utilizing credit information analytics and digital drivers” said Rajesh Kumar, MD and CEO, Transunion Cibil. “Credit infusion through the ECLGS has set the MSME sector on a long-term and sustainable growth trajectory which bodes well for the resurgence of India’s economy.”
The very small and micro enterprises were the most affected by the crisis. The credit bureau’s analysis indicates that the ECLGS scheme has benefitted this class. Of the total number of borrowers who availed loans under this scheme, 58.5% belong to the very small category (overall credit exposure less than Rs 10 Lakhs) and 32% belong to the micro category (overall credit exposure between Rs 10 Lakhs and Rs one crore). In terms of value, the share of very small and micro segment is at 30%
Top five states of Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka that are high on industrial and commercial activity and also have a significant share in overall MSME exposure, contributed to 47% of total ECLGS loan disbursements.
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