SBI Research in its latest report has said that emergency Credit Line Guarantee Scheme (ECLGS) launched in 2020 to provide relief to micro, small and medium enterprises (MSMEs) impacted by COVID-19 pandemic, has saved 13.5 lakh firms from going bankrupt and consequently 1.5 crore jobs.
In absolute terms, the report claimed MSME loan accounts worth Rs 1.8 lakh crore were saved from slipping into NPA during the period and this is equivalent to 14 per cent of the outstanding MSME credit being saved from becoming NPA. As per to the report, if these units had turned non-performing, then 1.5 crore workers would have become unemployed. In effect, the ECLGS saved the livelihood for 6 crore families (assuming four family members per worker including herself).
The report further suggested revamping of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for boosting credit flow to the sector. It noted that interestingly, CGTMSE portfolio have more than 55 per cent recovery rate, low portfolio delinquency, low capital requirement but still an unpopular product, and added that conversely, the non CGTMSE portfolio/ collateralised has a 25 per cent recovery rate, high portfolio delinquency implying much higher loan loss provisions with high capital requirement but still a popular portfolio.
