Public sector banks have sanctioned loans worth Rs 29,490.81 crore under the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) as of 11 June, 2020. Of this, an amount of Rs 14,690.84 crore has already been disbursed. The Centre has announced the scheme to help small businesses meet liquidity needs during the ongoing pandemic, and official data adds that already loans have been disbursed to 3,75,087 accounts, with a wide spectrum of industries benefiting from the scheme.

The Centre has recently announced the Rs 20-lakh crore Self-Reliant India Mission package, of which ECLGS scheme is the biggest fiscal component. Under this scheme, a fund for collateral-free automatic loans worth Rs 3 lakh crore has been earmarked for businesses to meet operational liabilities, buy raw material and restart business. Initially, many a small business complained about some unwarranted hurdles, but it now seems that loan disbursal is finally picking up pace under the scheme.

Some entrepreneurs pointed out that though the scheme provides for 100% guarantee coverage for 20% additional working capital term loans, some banks insisted on Memorandum of Deposit of Title Deed (MODT). In fact, the Centre later warned that banks would face consequences if they create unwanted hurdles or delays, adding that a few bank officials at the branch level were reportedly creating problems in loan disbursal. It is also encouraging that the Finance Minister has continued to review the situation from time to time.

Meanwhile, latest data shows that factory output plunged by a whopping (-) 55.5% on a YoY basis in April, with all major sectors such as manufacturing, mining and electricity showing contraction. This decline is sharp and it is probably why the percentage figures were not released by the government. But the figures are on expected lines as a nationwide lockdown brought industrial activity into a halt from the end of March, 2020 onward.

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