Livemint, New Delhi | By Rajeev Jasyaswal
State banks disbursed half of the ??32,050 crore loan they sanctioned to small businesses as of June 12 as part of the ??3 lakh crore unsecured emergency credit guarantee program launched in May to boost micro, small and medium enterprises (MSMEs) affected by the Covid-19 pandemic and the lockdown that followed.
“As of June 12, 2020, the #PSB [public sector banks] sanctioned loans worth ??32,049.86 crore under 100% Emergency Line of Credit Guarantee Program [ECLGS], among which ?? 16,031.39 crore have already been disbursed, ”Finance Minister Nirmala Sitharaman’s office tweeted on Tuesday.
The emergency credit facility was announced by the Minister of Finance on May 13 as part of the first tranche of the Aatmanirbhar Bharat Abhiyan (India Independence Initiative) from the National Democratic Alliance government .
It provides for an additional working capital loan at a concessional interest rate to an existing borrower who is not in default.
The Union cabinet approved on May 21 the supplementary financing scheme at a concessional rate of 9.25% for MSMEs and other small businesses.
The mechanism offers additional working capital equivalent to 20% of the outstanding credit at February 29, 2020 in the form of a term loan to units up to ??25 crore of outstanding credit and annual income of up to ??100 crores. According to the finance minister’s office, 12 PSBs have granted loans to 854,128 accounts as of June 12. The money went to 423,818 of them.
India’s largest bank, the State Bank of India (SBI), has disbursed ??8,776.19 crore under the program out of a total sanctioned amount of ??14,559.89 crores. Canara Bank was second on the list with ??1,306.47 crore in disbursement (out of a sanctioned amount of ??2,739.76 crores). Sitharaman said that the ??The 3 lakh crore emergency working capital facility was 100% guaranteed by the Center.