Though the government has announced an increase in the ECLGS limit from Rs 3 lakh crore to Rs 4.5 lakh crore, officials do not expect a big jump, amid demand that more small businesses be able to use the window. The eligibility criteria should be simplified. When the scheme was announced last year, it was meant for Micro, Small and Medium Enterprises (MSMEs) but later its scope was extended as the demand was not sufficient.
A little less than 1.1 crore as of July 2 MSME Guarantee-based assistance of Rs 1.65 lakh crore has been provided to borrowers, which translates into an average ticket size of Rs 1.5 lakh. Under the scheme originally announced, MSMEs with loans up to Rs 50 crore at the end of February 2020 with past dues of up to 60 days were also eligible. MSME industry groups say that the situation is such that it is difficult for traders to take loans. “The requirements were such that only a certain group of entities with existing loans were eligible. Now banks are hesitant to give loans. The government should have waived the pre-loan condition as we are seeing that cash flow is getting disrupted for a lot of MSME units. Animesh Saxena, President of Federation of Indian Micro and Small and Medium Enterprises (FISMA)
Recently, the Parliamentary Standing Committee on Industry noted that there is a huge gap between sanctions and disbursements as banks fear defaults in the wake of the second wave.
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