Bikky Khosla | 14 Jun, 2020
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
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.
I invite your opinions.