ECLGS saved ₹2.2-trn loans from turning into NPAS: SBI report

THE EMERGENCY CREDIT Line Guarantee Scheme (ECLGS), launched in the wake of the pandemic in May 2020, has prevented loans of ₹2.2 trillion to micro, small and medium enterprises (MSMEs), or 12% of the outstanding credit to these units, from slipping into nonperforming assets (NPAs), according to a research report by State Bank of India (SBI).

- BANIKINKAR PATTANAYAK

The scheme, under which the government offers 100% guarantee on the loans disbursed, thus prevented 1.46 million MSMES accounts from being downgraded and saved 16.5 million jobs until November, 2022. Assuming four family members per worker, the prevention of job losses saved the livelihood of 66 million people. As many as 93.8% of these accounts were in the micro and small category, said the report by Soumya Kanti Ghosh, group chief economic adviser at SBI.

In its report a year ago, SBI Research had estimated that MSME loan accounts worth 1.8 trillion (14% of such outstanding advances) were saved from slipping into NPAs until then due to the ECLGS. It had helped save 15 million jobs.

The scheme was initially meant to support only MSMEs but its scope was later expanded to cover select categories of larger entities.

The limit of the loan has been raised to 5 trillion from the initial 3 trillion. According to the RBI's Financial Stability Report released last month, loans of ₹2.82 trillion were disbursed until September 2022.