Credit and Finance for MSMEs: The number of loans sanctioned by public and private sector banks and non-banking financial companies (NBFCs) to MSMEs under the 59-minute loan approval scheme as of April 30, 2021, stood at 2,31,425 involving Rs 76,670 crore. Of this, 2,15,836 loans amounting to Rs 62,722 crore were disbursed, according to the available data from the Ministry of MSME. This is up from 2,03,120 loans worth Rs 56,773 crores disbursed as of November 30, 2020, and 1,96,473 loans involving Rs 54,545 crores disbursed as of August 31, 2020. SBI, Punjab National Bank, Bank of Baroda, ICICI Bank, Kotak Mahindra Bank, Indian Bank, Central Bank of India, Yes Bank, and more are the partner banks for SIDBI’s 59-minute loan approval scheme.
Launched in November 2018 by Prime Minister Narendra Modi, the scheme offers business loans including term loans and working capital loans, and Mudra loans to MSMEs for purchase of plant and machinery, technology upgrade, product expansion, purchase of raw materials, infrastructure development, etc. While in-principle approval is offered for term loans and working capital loans ranging between Rs 1 lakh and Rs 5 crore, the credit limit under Mudra loans is up to Rs 10 lakh. Mudra loans are extended under Shishu loans up to Rs 50,000, Kishore loans between above Rs 50,000 and up to Rs 5 lakh, and Tarun loans above Rs 5 lakh and up to Rs 10 lakh.
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Importantly, Rs 62,722 crore loans disbursed to MSMEs under the 59-minute loan scheme as of April 30, 2021, were 4.7 per cent of the gross bank credit deployed to MSMEs in March 2021. According to the RBI’s April bulletin, Rs 13,13,358 crore (Rs 11,07,236 crore to micro and small enterprises and Rs 2,06,122 crore to medium enterprises) was the gross bank credit to MSMEs as of March 26, 2021. “Getting this much disbursed from banks is also quite significant for MSMEs. Most of these loans are under Rs 1 crore and the majority are concentrated around Rs 20 lakh or less. It is mostly first-time borrowers that are taking credit under this scheme. But if you would expect this 4.7 per cent share in total credit exposure to MSMEs to be, let’s say, over 20 per cent, then that won’t happen immediately,” Govind Lele, General Secretary, Laghu Udyog Bharati told Financial Express Online.
Meanwhile, in order to support Covid-hit MSMEs further, the government had on Sunday had extended the Emergency Credit Line Guarantee (ECLGS) scheme by three months to September 30, 2021, from June 30, 2021, or till guarantees for an amount of Rs 3 lakh crore are issued under the fourth revision of the scheme dubbed ECLGS 4.0. The Ministry of Finance also announced a 100 per cent guarantee cover to loans up to Rs 2 crore to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants and included the civil aviation sector under ECLGS 3.0 scheme.