{"id":33064,"date":"2023-01-24T07:01:25","date_gmt":"2023-01-24T01:31:25","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=33064"},"modified":"2025-04-19T18:22:18","modified_gmt":"2025-04-19T12:52:18","slug":"emergency-credit-guarantee-scheme","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/emergency-credit-guarantee-scheme\/","title":{"rendered":"Emergency Credit Guarantee Scheme"},"content":{"rendered":"<h3><strong>What\u2019s in today\u2019s article?<\/strong><\/h3>\n<ul>\n<li><strong>Why in news?<\/strong><\/li>\n<li><strong>What is Emergency Credit Line Guarantee Scheme (ECLGS)?<\/strong><\/li>\n<li><strong>What is the purpose of ECLGS?<\/strong><\/li>\n<li><strong>How has ECLGS performed so far?<\/strong><\/li>\n<li><strong>What is MSME?<\/strong><\/li>\n<li><strong>News Summary: Emergency credit guarantee scheme\u00a0<\/strong><\/li>\n<li><strong>What are the key highlights of the SBI report?<\/strong><\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>Why in news?<\/strong><\/h2>\n<ul>\n<li>According to an SBI Research analysis, at least 14.6 lakh micro, small and medium enterprises (MSMEs) accounts were saved due to the Emergency Credit Line Guarantee Scheme (ECLGS).<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What is Emergency Credit Line Guarantee Scheme (ECLGS<\/strong>)?<\/h2>\n<ul>\n<li>The ECLGS was unveiled as part of the comprehensive package announced by Finance Ministry.\u00a0\n<ul>\n<li>Emergency Credit Line Guarantee Scheme (ECLGS) was launched in different phases &#8211; ECLGS 1.0, ECLGS 2.0, ECLGS 3.0, ECLGS 4.0.<\/li>\n<\/ul>\n<\/li>\n<li>This scheme was launched to aid Micro, Small and Medium Enterprises (MSMEs) sector in view of the economic distress caused by the COVID-19 pandemic\u00a0.<\/li>\n<li>In different phases, the scope of this scheme was increased to include multiple sectors.<\/li>\n<li>The scheme is under the operational domain of Ministry of Finance, Department of Financial Services (DFS).\n<ul>\n<li>National Credit Guarantee Trustee Company Ltd (NCGTC) has been set up as a company by the Union \u00a0Ministry of Finance to manage and provide guarantees to these loans.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>What is the purpose of ECLGS?<\/strong><\/h2>\n<ul>\n<li>The ECLGS aims to provide 100 percent guaranteed coverage to the banks, non-banking financial institutions (NBFCs) and other lending institutions.\u00a0<\/li>\n<li>The idea was to enable these lending institutions to extend emergency credit to business entities that have suffered due to the Covid-19 pandemic and are struggling to meet their working capital requirements.<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>How has ECLGS performed so far?\u00a0<\/strong><\/h2>\n<ul>\n<li>The overall ceiling initially announced for ECLGS was Rs 3 lakh crore which was subsequently enhanced to Rs 4.5 lakh crore.\u00a0\n<ul>\n<li>In August 2022, the govt increased the ceiling to 5 lakh crore.<\/li>\n<\/ul>\n<\/li>\n<li>However, ECLGS is a demand driven scheme. Hence, sanctions\/disbursements are made by lending institutions based on assessment of borrower\u2019s requirement and their eligibility.<\/li>\n<li>As of August 5, 2022, loans of \u20b93.67 lakh crore have already been sanctioned under the scheme.\u00a0\n<ul>\n<li>More than 1.14 crore borrowers have been issued guarantee under the scheme.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What is MSME?<\/strong><\/h2>\n<p><img decoding=\"async\" src=\"https:\/\/lh4.googleusercontent.com\/U_5QLKHRf3_ZICqb9eF6feDD-up29rT6cro6tduHJYy11KZlmqfa4Mci3yYosbHx3fAEVhAss3QVkZlt0S_9fy_7c-FMJXYKNH02tDYykJ58d3S54gS_zAHqfvmlacimZbTCjoOeObZ1YCyuAo3Gow\" alt=\"\" \/><\/p>\n<p>Image Caption: MSME Definition<\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>News Summary: Emergency credit guarantee scheme\u00a0<\/strong><\/h2>\n<h3><strong>What are the key highlights of the SBI report?<\/strong><\/h3>\n<ul>\n<li><strong>\u00a0Impact of the scheme on MSME units &amp; employment<\/strong>\n<ul>\n<li>At least 14.6 lakh MSMEs accounts were saved due to the ECLGS, thus saving around 6.6 crores of jobs till November, 2022.<\/li>\n<\/ul>\n<\/li>\n<li><strong>\u00a0Size of total MSME loan accounts which were saved from slipping into NPA<\/strong>\n<ul>\n<li>In absolute terms, MSME loan accounts worth Rs 2.2 lakh crore have improved since the inception of ECLGS for the entire banking industry.\u00a0<\/li>\n<li>This means that around 12 per cent of the outstanding MSME credit has been saved from slipping into NPA because of this scheme.<\/li>\n<\/ul>\n<\/li>\n<li><strong>\u00a0MSME units becoming larger<\/strong>\n<ul>\n<li>The report noted that there is evidence of MSME units becoming larger with several units crossing the threshold of Rs 250-crore turnover.<\/li>\n<li>This reveals integration of MSME units with a larger value chain.<\/li>\n<\/ul>\n<\/li>\n<li><strong>\u00a0Urgent need to revamp the Credit Guarantee Scheme for the MSME sector<\/strong>\n<ul>\n<li>There is an urgent need to revamp the Credit Guarantee Scheme for the MSME sector.\n<ul>\n<li>To catalyse flow of institutional credit to MSMEs, govt has set up Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).<\/li>\n<\/ul>\n<\/li>\n<li>In this regard, the report said that the U.S. Small Business Administration (US-SBA) could be as template.<\/li>\n<\/ul>\n<\/li>\n<li><strong>\u00a0Increase the maximum loan amount for coverage under CGTMSE<\/strong>\n<ul>\n<li>The maximum loan amount for coverage under CGTMSE may be increased from Rs 2 crore to Rs 5 crore for all activities under manufacturing, services and trade sectors.<\/li>\n<li>Guarantee coverage for the units having women promoters should be increased to 100% to give fillip to women entrepreneurship.<\/li>\n<\/ul>\n<\/li>\n<li><strong>\u00a0Other suggestions<\/strong>\n<ul>\n<li>It proposed increasing claims settlement to the extent of 10 times of the guarantee fee paid by the banks.<\/li>\n<li>It also emphasised on complete end-to-end digital platform to ensure real time sanction, disbursement and claim settlement for the guaranteed portfolio.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3><strong>Q1)<\/strong>\u00a0<strong>What is meant by Priority Sector Lending?<\/strong><\/h3>\n<p><strong>\u00a0<\/strong>Priority sector lending includes only those sectors as part of the priority sector, that impact large sections of the population, the weaker sections and the sectors which are employment-intensive such as agriculture, and Micro and Small enterprises.<\/p>\n<p>&nbsp;<\/p>\n<h3><strong>Q2)\u00a0What is Cluster financing?<\/strong><\/h3>\n<p>\u00a0Cluster based approach to lending is intended to provide a full-service approach to cater to the diverse needs of the MSE sector which may be achieved through extending banking services to recognized MSE clusters. A cluster-based approach may be more beneficial (a) in dealing with well-defined and recognized groups (b) availability of appropriate information for risk assessment (c) monitoring by the lending institutions and (d) reduction in costs.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p>Source:\u00a0<a href=\"https:\/\/indianexpress.com\/article\/business\/economy\/eclgs-bailed-out-14-6-lakh-msmes-says-sbi-report-8400224\/#:~:text=At%20least%2014.6%20lakh%20micro,Bank%20of%20India%20research%20report.\" target=\"_blank\" rel=\"nofollow noopener\"><u>ECLGS bailed out 14.6 lakh MSMEs, says SBI report<\/u><\/a>\u00a0|\u00a0<a href=\"https:\/\/static.pib.gov.in\/WriteReadData\/specificdocs\/documents\/2022\/jun\/doc202261063401.pdf\" target=\"_blank\" rel=\"nofollow noopener\"><u>PIB<\/u><\/a>\u00a0|\u00a0<a href=\"https:\/\/www.cgtmse.in\/Home\/VS\/3\" target=\"_blank\" rel=\"nofollow noopener\"><u>CGTMSE<\/u><\/a>\u00a0|\u00a0<a href=\"https:\/\/msme.gov.in\/know-about-msme\" target=\"_blank\" rel=\"nofollow noopener\"><u>Ministry of MSME<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Emergency Credit Guarantee Scheme was launched to aid MSME sector to wean off pandemic distress.<\/p>\n","protected":false},"author":5,"featured_media":33065,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-33064","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/33064","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=33064"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/33064\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/33065"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=33064"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=33064"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=33064"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}