With the help of their networks, every public sector bank could be able to reach a higher number of medium and small enterprises. The government of India launched this scheme during the situation. It helped many medium and small enterprise units. Almost 13.5 lakh accounts of medium and small enterprises got saved due to the introduction of this scheme. Out of which 97% accounts fall into the category of medium and small enterprises. In short, an amount of 14% of the outstanding credits of these enterprises got saved from becoming NPA.
The ECLGS scheme for MSME borrowers helps revitalize India’s medium and small enterprises sector. It is one of the sectors that happen to be the backbone of the country’s economic engine.
As per the analysis, if all these units were non-performing, more than 1.5 crore workers would be unemployed. Therefore the introduction of this scheme helps to save the livelihood of more than 6 crores of families.
Different sectors get the benefit of the ECLGS scheme
In addition to that, the trading sector happens to get the most benefit out of this scheme. Moreover, the idea of collateral free loans for MSME helps revive these sectors as much as possible. Apart from the trading sector, the other sectors, including food processing, commercial realty, and textile, receive the biggest benefit. Some of the states accounted for over 75% of the outstanding amount that got saved from slipping into the bad loan area.
The magnitude of the crisis got limited
After the impact of the covid-19 crisis, the medium and small enterprises got affected very badly. Their ability to withstand such a crisis is quite limited. Due to this reason, the medium and small enterprises needed to get immediate liquidation. It was the only way to navigate their way through the crisis. It would help them to sustain their livelihood. But with the introduction of the emergency credit line guarantee scheme by the government of India, these medium and small enterprise segments revived themselves. Out of the total number of enterprises that took the help of this scheme, 32% belong to the micro category. At the same time, 58% of the enterprises belong to the small category.
The micro category business had an exposure of less than Rs. 10 lacs for their business. But the small category has an overall exposure of Rs. 10 lacs to 1 crore.
Meeting the objective of the financial crisis
The emergency credit line guarantee scheme for medium and small enterprises provides the needed financial assistance to these segments. They were vulnerable during the crisis. Due to this the impact of the pandemic happens to take a large toll on their existence. Because of the timely financial infusion into these medium and small enterprises, the enterprises could revive the business properly. It helps to enhance the possibility of the sustainable growth of the business.
Leading financial institutions offer this loan to help medium and small enterprises improve their cash flow. The scheme helps to infuse liquidity into the medium and small Enterprise sector while providing aid for a period of 4 years. It includes the twelve-month moratorium for the principal amount.
In case you do not qualify for this scheme, you can apply for a collateral-free MSME loan from leading NBFCs and lenders. Bajaj Finserv, one of the leading NBFCs, also provides unsecured loans for MSMEs with simple eligibility and minimal documents. You can also check your pre-approved offers with this NBFC and get the funds you need in an instant.