Public Sector Banks disburse Rs 16,031 crore to MSMEs under emergency credit scheme
Markets are open, factories are running, and people have already started to come out to buy stuff. But small businesses are still under heavy distress. The 52 days when the whole of India was under lockdown, these small businesses went on the verge of bankruptcy. To pull them out of the financial dip, the ministry of finance has announced that public sector banks have disbursed Rs 16,031.39 crore to MSMEs.
This vast sum of money is disbursed in the form of loans and credits under the central government’s Emergency Credit Line Guarantee Scheme (ECLGS).
What Is ECLGS?
In his speech on May 12, 2020, Prime Minister Narendra Modi unveiled what is informally known as Atmanirbhar Bharat Abhiyaan. Under this initiative, the government is supposed to help local companies and local goods instead of foreign goods and companies. PM Modi announced Rs 20-lakh crore for Atmanirbhar Bharat Abhiyaan.
Now, ECLGS is the biggest financial component of those Rs 20-lakh crore. The money disbursed under ECLGS is supposed to help MSMEs that are under distress due to COVID-19 spread.
What Does It Mean For You?
If you are running a business that comes under MSMEs, there are high chances that you have already applied for some kind of loan, credit or financial help from any banking institution. If your banking institution has agreed to help you in terms of, say, loan sanction, it was done under the same ECLGS scheme.
Rs 16,000 crore have already been disbursed to 4,24,000 MSMEs’ accounts. The State Bank of India alone has disbursed Rs 8,700 crore under ECLGS.
In an official statement, SBI said, “The bank has sanctioned GECL aggregating Rs 15,000 crore to 1.5 lakh MSME customers. SBI so far has disbursed loans worth Rs 8,700 crore.”
However, if you have not applied for any such thing yet but are in a financial crisis, then you should immediately go to your bank because the government has directed public sector banks to help MSMEs.
What After ECLGS?
The public sector banks have sanctioned loans worth Rs 32,049.86 crore, out of which Rs 16,031.39 crore have already been disbursed. But this fiscal help will come to an end when the loan amount hits the limit set by the finance ministry.
To help MSMEs further than this, Finance Minister Nirmala Sitharaman held a meeting with Private banks and NBFCs on Monday. The main objective of this meeting was to take an overview of the situation and to assess if financial institutions in the country are ready to inject liquidity in the market.