State-run banks have disbursed half the ₹32,050 crore loan they sanctioned to small businesses as of June 12 under the ₹3 lakh crore collateral-free emergency credit guarantee scheme launched in May to boost micro, small and medium enterprises (MSMEs) hit by the Covid-19 pandemic and subsequent lockdown.
“As of 12 June 2020, #PSBs [public sector banks] have sanctioned loans worth ₹32,049.86 crore under the 100% Emergency Credit Line Guarantee Scheme [ECLGS], out of which ₹ 16,031.39 crore has already been disbursed,” the office of finance minister Nirmala Sitharaman tweeted on Tuesday.
The emergency credit facility was announced by the finance minister on May 13 as a part of the first tranche of the Aatmanirbhar Bharat Abhiyan (Self-reliant India Initiative) of the National Democratic Alliance government.
It provides for an additional working capital loan at a concessional rate of interest to an existing borrower who is not a defaulter.
The Union cabinet had approved the additional funding scheme on May 21 at a concessional rate of 9.25% for MSMEs and other small businesses.
The scheme offers additional working capital equivalent to 20% of the outstanding credit as on February 29, 2020 in the form of a term loan to units with up to ₹25 crore in outstanding credit and annual revenue of up to ₹100 crore. According to the finance minister’s office, 12 PSBs have sanctioned loans to 854,128 accounts as of June 12. The money has been disbursed to 423,818 of them.
India’s largest bank, State Bank of India (SBI), has disbursed ₹8,776.19 crore under the scheme out of a total sanctioned amount of ₹14,559.89 crore. Canara Bank was second on the list with ₹1,306.47 crore of disbursal (out of a sanctioned amount of ₹2,739.76 crore). Sitharaman has said that the ₹3 lakh crore emergency working capital facility was 100% guaranteed by the Centre.