Incentives provided by the Emergency Credit Line Guarantee Scheme (ECLGS) have helped boost the flow of credit to MSMEs, with at least 14.6 lakh MSME (micro, small and medium-sized enterprises) accounts saved thanks to to the scheme, according to an analysis by State Bank. of India’s Department of Economic Research.
In absolute terms, MSME loan accounts worth ₹ 2.2 lakh crore improved since the inception of ECLGS for the entire banking industry, according to ERD analysis.
“This means that around 12 percent of the outstanding credit for MSMEs has been saved from falling into NPA (non-performing assets) due to the ECLG scheme,” said Soumya Kanti Ghosh, the group’s chief economic adviser, SBI.
Outstanding loans to MSMEs increased from ₹16 lakh crore in FY20 to ₹18 lakh crore in FY21 and ₹20 lakh crore in FY22, according to the report.
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The government-backed scheme, which has been far more successful (versus the Micro and Small Business Credit Guarantee Fund Trust/CGTMSE) in easing the hardships of the MSME sector, has saved the livelihoods of around 6, 6 crores of people, the report said.
ECLGS was launched by the government in view of the Covid-19 crisis. It provides a 100 per cent guarantee to banks and NBFCs to enable them to extend emergency credit lines to MSMEs/Business Enterprises (with an outstanding loan of up to ₹50 crore as of 29 Feb 2020 and a turnover of up to ₹250 crore in FY20) to meet your additional term loan/working capital requirements.
The report noted that there is clear evidence that MSME units are getting larger with several units crossing the ₹250 crore turnover threshold and becoming medium-sized businesses under the new definition of MSME units.
This reveals the integration of MSME units with a larger value chain as PLI (production-linked incentives) activity is gaining momentum, he added.
“Interestingly, the data indicates that all SME units are getting larger with increased economic activity. This will increase the ability of MSME units to raise capital through debt (non-bank) markets.
“Only 410 companies have been listed on the BSE SME platform, but almost 40 percent of them have moved to the main platform, indicating that listing on the capital market helps to gain scale much faster,” Ghosh said. .
Referring to the Udyam Assist Platform (UAP), the report estimated that the platform would benefit up to Rs 5 crore from Informal Micro-Enterprises (IMEs). UAP has been developed by SIBDI to enable IMEs that are not registered under GST to obtain a certificate of registration from the government based on information available with banks/NBFCs.
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“States like West Bengal, Uttar Pradesh, Tamil Nadu, Karnataka and Andhra Pradesh could benefit from EMI registrations of Rs 2.6 crore,” the report added.
Pushing IMEs into the realm of formalization will result in the registration of smaller companies that are mostly self-employed, which in turn will boost employment, ensure credit expansion and establish the architecture for the credit mechanism. formal, Ghosh said.
With the change in the definition of MSMEs in 2020, the government mandated all MSMEs to register on the Udyam portal. The number of GST registrations in India is about Rs 1.40 crore while the current MSME units registered under Udyam Certification is about Rs 1.33 crore.
