Banks Disburse Loans Over Rs 30,000 Crore To MSMEs Under Credit Guarantee Scheme
Lenders disbursed around 10% of amount announced under a government-backed collateral-free loan facility for small businesses.
As the Indian economy opens up gradually in phases after a stringent national lockdown that was imposed to control the Covid-19 outbreak, small businesses have begun to opt for a government-backed collateral-free loan facility.
State-run and private banks have disbursed loans worth nearly Rs 32,985 crore to small businesses under the 100% Emergency Credit Line Guarantee Scheme for micro, medium and small enterprises amounting to Rs 3 lakh crore in a month, the Finance Ministry said on Monday. The lenders had sanctioned loans worth Rs 75,426 crore to such borrowers during the same period.
Finance Minister Nirmala Sitharaman had announced the credit guarantee scheme in May, under which the government would provide 100% guarantee to banks on such loans. The scheme can be availed until Oct. 31, and the government expects more borrowers to avail the facility as the stringent lockdown gets lifted.
Of the Rs 32,985 crore disbursed, state-run banks pitched in Rs 22,197 crore to MSMEs, while private banks advanced loans worth Rs 10,697 crore. The finance minister had, last week, asked private lenders to effectively implement the credit-guarantee scheme—which was rolled out to ease the economic crisis triggered by Covid-19 pandemic—following concerns that they weren’t participating in the initiative.
State Bank of India sanctioned and disbursed loans worth Rs 16,235 crore and Rs 10,960 crore, respectively, to MSMEs among its state-run peers, followed by Canara Bank, which disbursed loans of Rs 2,132 crore.
Most loans were availed by small firms in Gujarat, where banks sanctioned as much as Rs 4,309 crore, and disbursed Rs 1,740 crore, the ministry said. In Tamil Nadu, banks sanctioned Rs 4,144 crore and disbursed Rs 2,625 crore.