The number of new borrowers for private sector banks under the government’s ECLGS is 67.61 lakh Plan There is three times the new borrowers attracted by public sector banks, which manage only 22.65 lakh new borrowers. Private banks disbursed Rs 95700 crore as compared to Rs 79800 crore disbursed by public sector banks. Reserve Bankof the latest Financial Stability Report.
Emergency Credit Line Guarantee Scheme (ECLGS), a government initiative launched on May 20,2020 to handhold MSME Provides 100% guarantee coverage to select borrowers to revive during the pandemic induced lockdown. It was originally designed for MSMEs/Business Enterprises, whose total fund-based credit outstanding across all lending institutions was up to Rs 25 crore. The plan has gone through various iterations. validity of ECLGS By March 31, 2023 or till the issue of guarantee amounting to Rs 5 lakh crore.
“ECLGS22 has played a vital role in reviving the MSME sector” reserve Bank of India Loans worth Rs 3.32 lakh crore were sanctioned under ECLGS till April 30, 2022, of which Rs 2.54 lakh crore was disbursed, of which Rs 2.36 lakh crore was disbursed by commercial banks.
“The market share of private banks increased from 33.6% in FY15 to 69.8% in FY22,” said a report by credit bureau CRIF Highmark. Their stake increased from 26.9% in FY15 to 33.5% in FY22 in FY21. This is due to an increase in the average ticket size of private banks from Rs 47.1 lakh to Rs 150.5 lakh from FY 2015 to FY 22.
According to RBI, growth in domestic demand and a boom in ancillary industries and service units has increased the financing requirement of the sector. Gross Non-Performing Assets – GNPA – The ratio of the combined public and private sector in the MSME sector has come down from 11.3 per cent in September 2021 to 9.3 per cent in March 2022. “However, they are relatively high” noted the RBI.
Further, the restructuring of the portfolio of Rs 46,186 crore, which accounts for 2.5 per cent of the total advances under the May 2021 plan, has the potential to create tension in the sector, the banking regulator warned.