MUMBAI: Private sector banks have show greater appetite than their public sector peers in utilising the Emergency Credit Line Guarantee Scheme (ECLGS), an RBI report said on Thursday.
Observing that the ECLGS has played a key role in reviving the MSME sector, the Financial Stability Report (FSR) said loans amounting to Rs 3.32 lakh crore were sanctioned under the scheme till April 30, 2022, of which an amount of Rs 2.54 lakh crore was disbursed (Rs 2.36 lakh crore by banks).
The drawdown under ECLGS 1.0, 2.0 and its extension comprised over 97 per cent of the total guarantees issued, it noted.
"PVBs (private sector banks) showed greater appetite than PSBs (public sector banks) in utilising different ECLGSs, though the number of repeat borrowers remained similar for PSBs and PVBs," the report said.
Borrowers who availed ECLGS 1.0 and 2.0 continue to avail extension facilities, it said.
"Coupled with the higher avail rate (i.e., proportion of MSME borrowers availing ECLGS loans to the total eligible base) among low-rated borrowers and those that had a higher need for credit even before the pandemic, this portends potential stress in banks' MSME portfolios," it said.
ECLGS, a government initiative launched on May 20, 2020, provides 100 per cent guarantee coverage from the National Credit Guarantee Trustee Company (NCGTC) to select borrowers.
It was originally devised for MSMEs/business enterprises whose total fund-based credit outstanding across all lending institutions was up to Rs 25 crore. The scheme has undergone different iterations since its launch.
The validity of ECLGS has been extended to March 31, 2023 or till guarantees for an amount of Rs 5 lakh crore are issued.
The report further said the aggregate GNPA ratio (PSBs and PVBs) in the MSME sector has moderated from 11.3 per cent in September 2021 to 9.3 per cent in March 2022.
"They, however, remain relatively high. Moreover, restructuring of portfolios to the tune of Rs 46,186 crore constituting 2.5 per cent of total advances under the May 2021 scheme has the potential to create stress in the sector," it said.
