👍MSME loan default: Lakhs of micro units turn NPAs under govt’s ECLGS scheme; check details | The Financial Express

Clipped from: https://www.financialexpress.com/industry/sme/msme-fin-msme-loan-default-lakhs-of-micro-units-turn-npas-under-govts-eclgs-scheme-check-details/3040823/

Credit and finance for MSMEs: As of February 28, 1.13 crore MSME borrowers were supported with Rs 2.40 lakh crore guarantee amount, of which 97.6 per cent – 1.10 crore borrowers were micro and small units.

eclgs, emergency credit line guarantee scheme, eclgs npa, eclgs workers, eclgs loans, msme accounts, micro and small enterprisesECLGS provided 100 per cent guarantee coverage by the National Credit Guarantee Trustee Company (NCGTC) to banks and other lenders on credit to MSMEs.

Credit and finance for MSMEs: Indicating distress in the micro enterprise segment in the country, 17.27 lakh units, which availed credit under the Emergency Credit Line Guarantee Scheme (ECLGS) out of total borrowers, have turned non-performing assets (NPAs) as of March 24, 2023. The data from the Department of Financial Services (DFS) was shared by MSME Minister Narayan Rane in the Rajya Sabha recently. Micro and small enterprises comprised of majority beneficiaries under ECLGS which expired on March 31, 2023.

As of February 28, 1.13 crore MSME borrowers were supported with Rs 2.40 lakh crore guarantee amount, of which 97.6 per cent – 1.10 crore borrowers were micro and small units. Moreover, the maximum guarantee offered was on the lower end.

Also read: Banks’ gross NPAs in MSME loans drop to 6.1%: Govt data

According to the DFS data shared by the minister of state in the MSME ministry Bhanu Pratap Singh Verma earlier this year in the Parliament, 98.9 lakh guarantees involving Rs 13,683 crore issued were up to Rs 1 lakh while 9.34 lakh guarantees involving Rs 22,086 crore ranged between Rs 1 lakh and Rs 5 lakh.

Further, 2.13 lakh and 2.67 lakh guarantees issued were between Rs 5 lakh and Rs 10 lakh and Rs 10 lakh and Rs 1 crore respectively. Only 38,907 guarantees were over Rs 1 crore and 21 guarantees were beyond Rs 50 crore while only two guarantees were over Rs 100 crore. 

ECLGS provided 100 per cent guarantee coverage by the National Credit Guarantee Trustee Company (NCGTC) to banks and other lenders on credit to MSMEs with overall loan outstanding across all lenders up to Rs 50 crore in any sector and classified as regular, SMA-0 (special mention account) or SMA-1 as on February 29, 2020 or March 31, 2021. The overall scheme limit was Rs 5 lakh crore.

Also read: ECLGS: 14.6 lakh MSMEs saved post Covid including livelihood of 6.6 crore people, says SBI report

Till September 2022, around 17.72 lakh accounts — one-sixth or 16.9 per cent of around 1.04 crore borrowers under ECLGS – had slipped into the NPA category, noted the Reserve Bank of India’s (RBI) Financial Stability Report in December last year. This included the 93.5 per cent share of micro enterprises in comparison to the 3.2 per cent share of other business enterprises, 2.8 of small enterprises, and 0.5 per cent of medium units. 

However, the overall gross non-performing asset (GNPA) ratio pertaining to MSMEs in the scheduled commercial banks (SCBs) has dropped to 6.1 per cent as of December 12 in the current financial year, as per data shared by MoS in the finance ministry Bhagwat Karad in a written reply to a question in the Rajya Sabha in March. SCBs’ GNPA ratio in MSME loans in FY22 stood at 7.6 per cent, 7.3 per cent in FY21 and 8.9 per cent in FY20.

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