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ECLGS saved MSME loans of Rs 1.8 tn turning into NPA

The State Bank of India’s Economic Research Department has estimated that almost 1.35 million MSMEs accounts were saved due to Emergency Credit Line Guarantee (ECLG) scheme (including restructured). In absolute terms, MSME loan accounts worth Rs1.8 trillion were saved from slipping into NPA during the period. This is equivalent to 14% of the outstanding MSME credit being saved from becoming NPA.

According to a research report, authored by Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, almost 93.7% of such accounts are in the micro and small category. If these units had turned nonperforming, 15 million workers would have lost their jobs. In effect, the ECLG scheme saved the livelihoods of 60 million families.

The trading sector, including small kirana shops, has benefitted the most followed by food processing, textiles, and commercial real estate. Among the states, Gujarat has been the biggest beneficiary, followed by Maharashtra, Tamil Nadu, and Uttar Pradesh, says the research report. In May 2020, the government launched the ECLGS scheme for MSMEs to provide relief to the sector hit due to the pandemic. 

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