Banks sanctioned ₹1.5 lakh crore easy loans to small enterprises
The scheme provides for an easy additional working capital loan at a concessional rate of interest to an existing borrower who is not a defaulter
Commercial banks have sanctioned ₹1.5 lakh crore and disbursed two-third of the amount among small enterprises and individual professionals under the ₹3 lakh crore emergency working loan facility to help them tide over the crisis triggered by the Covid-19 pandemic, an official statement said on Thursday.
“Under the 100% Emergency Credit Line Guarantee Scheme (ECLGS) backed by a Government of India guarantee, banks from public and private sectors have sanctioned loans worth over ₹1.5 lakh crore as of 18th August, 2020, of which more than ₹1 lakh crore has already been disbursed,” the finance ministry statement said.
The Union Cabinet on May 20 approved ECLGS, which can be levered up to ₹3 lakh crore, for about five months ending October 31. The scheme provides for an easy additional working capital loan at a concessional rate of interest to an existing borrower who is not a defaulter.
ECLGS is one of the key components of the ₹20 lakh crore economic stimulus package under the Atmanirbhar Bharat Abhiyan (Self-Reliant India Initiative) launched in mid-May, which offered additional working capital finance of 20% of the outstanding credit as of February 29 in the form of a term loan to units with up to ₹25 crore outstanding and revenue of up to ₹100 crore.
The government may also consider extending the October 31 deadline to avail the emergency working loan facility, a finance ministry official said requesting anonymity. The finance ministry had already extended the scope of the provision by enhancing eligibility criteria to include larger units and individual professionals such as doctors and chartered accountants.
The government expects a ₹1 lakh crore loan offtake by newly eligible individual professionals. Some headroom may still remain, which could prompt the government to extend the deadline, the official cited above said.
According to the finance ministry statement, under the ECLGS, public sector banks (PSBs) have sanctioned loans worth ₹76,044.44 crore, out of which ₹56,483.41 crore has already been disbursed. Private sector banks have so far sanctioned ₹74,715.02 crore loan out of which ₹45,762.36 crore has already been disbursed, it said.
“The top lenders under the scheme are State Bank of India (SBI), Canara Bank, Punjab National Bank (PNB), Bank of India, Union Bank of India and HDFC Bank Ltd,” it said.
The National Credit Guarantee Trustee Company Ltd, which issued the operational guidelines of ECLGS on June 2, said the interest rate under the scheme is capped at 9.25% per annum for banks and financial institutions. For non-banking finance companies, the interest rate should not exceed 14% per annum. NCGTC is a wholly-owned company of the Union government formed in March 2014 to act as a trustee for multiple credit guarantee funds.
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