FM Sitharaman to meet heads of banks over emergency credit to MSMEs

The finance ministry has called a meeting of heads of public sector banks and top four private sector lenders to review the progress of the emergency credit line guarantee scheme (ECLGS) to help businesses affected by COVID-19.

The meeting is scheduled to be held on February 22 to review progress on ECLGS and Loan Guarantee Scheme for COVID-Affected Sectors (LGSCAS), sources said.

The meeting, to be chaired by Financial Services Secretary Vivek Joshi, would also see participation from top private sector lenders HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank.

Extension of ECLGS and LGSCAS beyond March 31 as well as challenges related to these would be deliberated.

ECLGS was announced as part of the Atmanirbhar Bharat Package in May 2020 with the objective to help businesses including MSMEs to meet their operational liabilities and resume businesses in view of the distress caused by the COVID-19 crisis, by providing banks, 100 per cent guarantee against any losses suffered by them due to non-repayment of the funding by borrowers. The overall ceiling initially announced for ECLGS was Rs 3 lakh crore which was subsequently enhanced to Rs 4.5 lakh crore.

Finance Minister Nirmala Sitharaman in the latest Budget said, "Last year, I proposed revamping the credit guarantee scheme for MSMEs. I am happy to announce that the revamped scheme will take effect from 1st April 2023 through the infusion of Rs 9,000 crore in the corpus.