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July 19, 2021

Loans to MSMES Industries under CGS

by CA Shivam Jaiswal in Compliance Law, Corporate Law

Loans to MSMES Industries under CGS

All new and existing Micro and Small Enterprises engaged in manufacturing or services including trading activity are eligible to be covered under Credit Guarantee Scheme (CGS) implemented by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). No eligible proposal is denied. Upto June 30, 2021 CGTMSE has approved 53,86,739 guarantees cumulatively for an amount of Rs. 2,72,007 crore. During the  first quarter of Financial Year 2021-22 CGTMSE has reported that guarantee approvals with respect to Banks and NBFCs are Rs. 6,693 crore and Rs. 6,603 crore respectively during first quarter of Financial Year 2021-22 as against Rs. 6,041 crore and Rs. 2,934 crore respectively during first quarter of Financial Year 2020-21.

During Financial Year 2020-21, CGTMSE has approved 22,021 guarantee applications amounting Rs. 1,408 Crore for the State of Telangana. 

Government of India has announced a relief package to support Indian Economy including the MSME Sector. This package inter-alia also includes measures such as Rs 1.1 lakh crore loan guarantee scheme for covid affected sectors, additional Rs 1.5 lakh crore for Emergency Credit Line Guarantee Scheme, Credit Guarantee Scheme to facilitate loans to approximately 25 lakh small borrowers through Micro Finance Institutions etc.

Disbursal of Loans to Msmes Under ECLGS

Emergency Credit Line Guarantee Scheme (ECLGS) is under the operational domain of Ministry of Finance, Department of Financial Services (DFS). As informed by DFS, as on 2.07.2021, guarantees have been issued for loan granted to around 1.09 crore Micro, Small and Medium Enterprises (MSMEs).

ECLGS being a demand driven scheme, sanctions/disbursements are made by lending institutions based on assessment of borrower’s requirement and their eligibility.

The eligibility criteria for availing credit  under ECLGS are:

  • For ECLGS 1.0, MSME units, Business Enterprises, Mudra Borrower and individual loans for business purpose having loan outstanding upto Rs.50 crore and days past due upto 60 days as on 29.02.2020.
  • For ECLGS 2.0, Borrower belonging to 26 stressed sectors identified by Kamath Committee & Healthcare sector having loan outstanding above Rs.50 crore and upto Rs.500 crore and days past due upto 60 days as on 29.02.2020.
  • For ECLGS 3.0  Borrower belonging to Hospitality, Travel & Tourism, Leisure & Sporting and Civil Aviation sector having days past upto 60 days as on 29.02.2020. 
  • For ECLGS 4.0 Existing Hospitals/Nursing Homes/Clinics/Medical Colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc. having credit facility with a lending institution with days past due upto 90 days as on March 31, 2021.

As on 2.07.2021 an amount of Rs.2.73 lakh crore have been sanctioned under the scheme of which an amount of Rs.2.14 lakh crore has been disbursed.

The scheme was designed to support existing borrowers meet the liquidity crisis due to Covid-19 pandemic. Ministry of MSME has launched Credit Guarantee Scheme for Subordinate Debt (CGSSD) to extend financial assistance to stressed MSMEs including NPA accounts.  The credit needs of the first time bowers belonging to the Micro and Small Enterprises are catered to by the Credit Guarantee Scheme for Micro and Small Enterprises.

This information was given by Minister for Micro. Small and Medium Enterprises Shri Narayan Rane in a written reply in the Rajya Sabha today.

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