On Tuesday (16 June 2020), State Bank of India announced that it disbursed Rs. 8,700 crores to the MSME (micro, small and medium enterprises) sector, under the Emergency Credit Line Guarantee Scheme (ECLGS).
ECLGS is a Rs. 3 lakh crore fiscal component of the mega Rs. 20 lakh crore package announced by the central government in May. Under this scheme, the National Credit Guarantee Trustee Company (NCGTC) will provide 100 percent guarantee coverage for up to Rs. 3 lakh crores to eligible MSMEs and MUDRA borrowers in the form of Guaranteed Emergency Credit Line (GECL) facility.
Following the directions of the Finance Ministry, SBI and other banks rolled out the GECL to support MSMEs and other business enterprises in accordance with the guidelines laid down by the NCGTC. For collateral loans, the borrower can apply for a tenor of 4 years. However, no pre-payment penalty shall be charged in case of early repayment. There will be a moratorium of 12 months on the principal repayment.
“The bank has sanctioned GECL aggregating Rs. 15,000 crores to 1.5 lakh MSME customers. SBI so far has disbursed loans worth Rs. 8,700 crores,” SBI said in a statement. Additional supportive measures such as COVID Emergency Credit Line, re-assessment of working capital limits, and restructuring of advances are also being made available to MSME customers, it added.
"MSMEs formed a very crucial part of the announcements made under the 'Aatmanirbhar Bharat Abhiyan' by the Government of India wherein MSMEs were defined. To empower them in the wake of the Covid-19 crisis, SBI organized more than 125 E-Town Hall meetings from May to date," it added.
As per the directives of the Department of Financial Services, it said, SBI conducted Circle level meetings to reach out to MSME customers and explain the various relief and financial support measures provided to them to fight the COVID-19 outbreak.
“MSME sector being the priority sector of the Indian economy, it was important to hold these meetings to understand the concerns and handhold our customers amid lockdown and provide them with much needed financial aid,” said Mr. C S Setty, MD (Retail & Digital Banking), SBI.
He added, “We are glad that our E-Town Hall meetings were attended and appreciated by our numerous MSME customers. We, along with the help of our employees, are continuously focusing on supporting MSMEs in these unprecedented times.”
GECL loans would be extended in the form of additional working capital term-loan facility to Scheduled Commercial Banks (SCBs) and Financial Institutions (FIs), and additional term-loan facility in case of Non-Banking Financial Institutions (NBFCs).
The scheme will apply to all loans sanctioned under GECL during the period from 23 May 2020 to 31 October 2020, or till an amount of Rs. 3 lakh crores is sanctioned, whichever is earlier.
While most banks are refraining from lending personal loans during the economic slowdown, SBI sanctioned about 3,26,000 loans amounting to Rs. 9,600 crores in the past 3 months, said Setty.
On Wednesday, the SBI stock remained in focus after the above-mentioned credit announcement.