Banks Sanctions Rs 1.86 Lakh Cr to 50 Lakh MSMEs Under Credit Guarantee Scheme

The Finance Ministry on Thursday said banks have sanctioned loans of about Rs 1.86 lakh crore to 50 lakh business units under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, impacted by slowdown due to the coronavirus pandemic. Over 27 lakh MSME units have received about Rs 1,32,246 crore till September 29.

The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package, announced by Finance Minister Nirmala Sitharaman in May to mitigate the distress caused by the lockdown due to COVID-19 by providing credit to different sectors, especially micro, small and medium enterprises (MSMEs). “As reported on 29.09.2020, by 12 Public Sector Banks, top 24 Private Sector Banks & 31 NBFCs, the total amount sanctioned to Non-Individual & individuals, under the 100 per cent Emergency Credit Line Guarantee Scheme stands at Rs 1,86,469 crore, of which Rs 1,32,246 crore has already been disbursed to 27,09,027 borrowers,” a Finance Ministry statement said.

While sharing the progress of implementation of various other schemes under Aatmanirbhar Bharat Abhiyan package, it said banks have approved the purchase of portfolio of Rs 25,505 crore, and Rs 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs, HFCs and MFIs to do fresh lending to MSMEs and individuals as on September 25. Lenders are currently in the process of approval/negotiations for additional Rs 3,171 crore, it said.

Talking about Income Tax refunds, it said, the department has issued Rs 1,18,324 crore to more than 33.5 lakh taxpayers since April 1, 2020. Legislative amendments to give effect to this announcement was incorporated in The Taxation and Other Laws (Relaxation and Amendment of Certain provisions) Bill, 2020, which was introduced in the Lok Sabha on September 18, 2020.

After the assent of the President, The Taxation and Other Laws (Relaxation and Amendment of certain provisions) Act, 2020 has been notified on September 29, the ministry said. With regard to Rs 30,000 crore Special Liquidity Scheme for the stressed non-bank financial companies (NBFCs)/ housing finance companies (HFCs)/ microfinance institutions (MFIs), it said 39 proposals involving an amount of Rs 11,120 crore have been approved.

“Out of this sanctioned amount, Rs 7,227 crore has been disbursed whereas Rs 182 crore will not be availed.The remaining sanctions of Rs 3,707 crore have lapsed. This Scheme has been closed on September 30, 2020,” it said. The statement also said that for furthering enhancement of ease of doing business through Insolvency and Bankruptcy Code related measure, the government has raised the threshold of default under section 4 of the IBC, 2016 to Rs 1 crore from the existing threshold of Rs 1 lakh in June.

Further, defaults arising between March 25, 2020, and till the completion of the suspension period will remain as non-est for the purpose of initiation of Corporate Insolvency Resolution Process (CIRP) under the Code as a permanent carve-out. “Section 66 of the Code is also amended to disallow the resolution professional from filing application of action against the directors or partners of the corporate debtor with respect of such default,” the ministry said.

The President has notified the Companies (Amendment) Bill, 2020 passed by Parliament on September 22. On May 20, the Cabinet approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for MSME sector.

Under the scheme, 100 per cent guarantee coverage will be provided by the 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 set up by the government, spread over the current and next three financial years.

The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till the amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier.