Public sector banks sanction 2,212 crore loans to MSMEs

Out of the total sanctioned 100% collateral-free loan amount, public sector banks have already disbursed over Rs 1,136 crore to 32,197 MSMEs in Punjab, Haryana, Himachal Pradesh and Chandigarh till June 11.

The public sector banks in the region have sanctioned a loan of over Rs 2,212 crore under the central government’s Emergency Credit Line Guarantee Scheme (ECLGS) to help 60,327 Micro, Small and Medium Enterprises (MSMEs) to cope up with the cash crunch suffered during the Covid-19 pandemic period.

Punjab alone has around 2.8 lakh MSMEs, which had incurred loss of over Rs 4,169 crore in two months of the lockdown. Out of the total sanctioned 100% collateral-free loan amount, public sector banks have already disbursed over Rs 1,136 crore to 32,197 MSMEs in Punjab, Haryana, Himachal Pradesh and Chandigarh till June 11.

As part of the economic stimulus, Union finance minister Nirmala Sitharaman had on May 13 announced the ECLGS for MSME. This loan is provided by the National Credit Guarantee Trustee Company (NCGTC) to banks, Non-Banking Financial Companies (NBFCs) and financial institutions for further disbursement.

According to the records of the public sector banks in the region, Punjab has the highest number of MSME units — 30,467 — that have availed benefit of loans under the ECLGS till date. Loans of as many as 17,952 MSMEs in Haryana have also been sanctioned till date. Similarly, 10,006 MSME units have taken the benefit of these loans in the hill state of Himachal Pradesh and 1,902 MSMEs in UT Chandigarh.

Punjab state level bankers’ committee’s lead bank manager for Ludhiana Anil Kumar, who is heading the Punjab and Sind Bank, told TOI, “Ludhiana is Punjab’s industrial hub and a large number of MSMEs facing cash crunch have taken the benefit of the ECLGS in Ludhiana during these difficult times for their business.”

Mandi Gobindgarh-based Vinod Vashisht, president of the All India Steel Re-Rollers Association and a beneficiary of the scheme, is of the view that ECLGS has come as a relief since the central government has announced one year moratorium on this loan.

“Initially, in April, the Centre had announced 10% loan of the previous outstanding loan with 1% processing fee. But we wrote to the RBI, the Prime Minister and the Union finance minister demanding some relaxations,” said Vashisht, who owns Lakshmi Steel Rolling Mills.

Now the central government has waived off the 1% processing fee on the loan and has set the 4-year period for repayment of loan.

Under the ECLGS, MSMEs having total outstanding loans across various banks, NBFCs and financial institutions up to Rs 25 crore as on February 29,are eligible for loans.