The benefits of the emergency credit line guarantee scheme (ECLGS) are not reaching deserving Micro, Small and Medium Enterprises (MSMEs), said TransUnion CIBIL MD and CEO Rajesh Kumar, quoting an analysis.

Addressing a FICCI webinar Kumar said, “According to the TransUnion CIBIL analysis, it is heartening to note that almost 81% of eligible MSMEs in ECLGS are structurally strong."

MSME sector is the lifeline of the country and in the current pandemic situation, it is critical to find and fund MSMEs that are structurally strong to refuel Indian economy, he added. 

He said that ECLGS is a simple and enabling scheme that will benefit MSMEs. In the COVID-19 scenario, TransUnion CIBIL is working towards helping and implementing the scheme. It is a good opportunity for strengthening our monitoring system for MSMEs.

TransUnion CIBIL is reaching out to eligible borrowers and also monitoring portfolios of existing and new loans, he added.  

Highlighting the objective and features of ECLGS, Kumar said that the scheme was launched by the Government of India for supporting MSMEs in the COVID-19 crisis.

It will provide relief to the MSME sector by incentivizing Member Lending Institutions (MLIs) to provide additional credit of up to Rs 3 lakh crore at low cost, enabling MSMEs to remain in business.

The scheme will infuse liquidity in the MSME sector, providing 100% government guaranteed loan for the period of 4 years including 12 months moratorium for principal amount and with a limit of 20% of total outstanding of upto Rs 25 crore, he added. 

Vipul Mahajan, Joint Vice President, Market Planner - Commercial Business, TransUnion CIBIL said that it is important to keep a watch on the signs on recovery to quickly align portfolio actions.

The signs of recovery include, starting of credit repayments, controlling debt build-up, granting ECLGS support, CIBIL MSME Rank remaining intact in good range, beginning of business transactions and good promoter risk situation.

He added that MSME credit was going through tough time pre-COVID but ECLGS has set the stage for boosting MSME sector.  

H P Kumar, Senior Executive Committee Member, FICCI CMSME and Former CMD, NSIC said that though the government has formulated policies, there is still a gap which remains to be bridged between MSMEs and access of funds. Due diligence by bankers is required while providing funds to MSMEs for protecting the interest of the borrower and bank.

NBFCs work on the ground with MSMEs and they can share the burden with banks and act as intermediaries in disbursement of funds to MSMEs. He added that there is a need for handholding of beneficiaries and FICCI has been working on this front with the stakeholders.

Uma Reddy, Member, FICCI-CMSME Executive Committee & Managing Director, Hitech Magnetics & Electronics Private Limited said that economic activities have begun but MSMEs are struggling and need support to recover.

The government has launched various schemes and economic packages for providing funds to MSMEs but the need is to understand how the sector can access these funds. She added that MSMEs during COVID-19 crisis have quickly adopted technology, Artificial Intelligence and robotics.

They are also looking at diversification and are now supplying COVID related products, Reddy said.