State Bank of India (SBI), according to its chairman Rajneesh Kumar, has approved loans of over Rs 20,000 crore in more than 400,000 Micro, Small and Medium Enterprises (MSME) accounts under the Emergency Credit Line Guarantee Scheme (ECLGS).
The centrally funded scheme provides 20 percent additional credit guarantee to the bank’s existing eligible borrowers from the MSME segment. It is part of a 20 trillion package designed to revive the economy disrupted by a lockdown imposed to stop the coronovirus (Covid-19) epidemic.
As per SBI’s call with analysts after the Q4FY20 result, it had 800,000 eligible borrowers under the Credit Guarantee Scheme. The eligible amount was estimated at Rs 29,000–30,000 crore, which is 20 percent of the 1.5 trillion portfolio. SBI’s SME loan portfolio declined by 7.27 per cent to Rs 2.67 trillion in March 2020 from Rs 2.88 trillion in March 2019.
The new definition of MSMEs, which includes both turnover and investment limits, has simplified things. The flow of credit in this sector will improve, Kumar said while addressing a session organized by the Confederation of Indian Industry (CII) on ‘International MSME Day’. He interacted with the MSME industry through a virtual platform.
The Chairman of SBI said that the Credit Guarantee Scheme for MSMEs under ‘Atmanirbhar Bharat’ will ease the pain of the sector, which has come under stress following the Covid-inspired crisis.
On the issue of financing, he said that SBI was increasingly using digital technology platforms to enable hassle free credit flow to MSME industries.
Data from Goods and Services Tax (GST) filings, income tax returns and analytics are helping the lender in classification and loan disbursements. This encouraged enterprises to use these digital platforms as it would help them gain better access to credit.