The interventions by Government for MSMEs, have been gaining rapid traction.  Under the Emergency Credit Line backed by a Government guarantee, Banks from Public & Private Sectors have so far already sanctioned loans worth over ₹ 79,000 crore as of June 20, 2020, of which more than ₹ 35,000 crore has already been disbursed.

The top lenders under the Scheme are SBI, HDFC Bank, Bank of Baroda, PNB & Canara Bank. This has helped 19 lakh MSMEs & other businesses restart their businesses post the lockdown. As part of the Aatmanirbhar package Government had announced its plans for ₹ 3 lakh Crore as additional credit to MSMEs and small businesses. Such enterprises were to be eligible to receive upto 20% of their existing borrowing as additional loans at interest rates which were capped.

Separately, under RBI’s Special Liquidity Facility announced in March-April, 2020, SIDBI has sanctioned over ₹ 10,220 crore to NBFCs, Micro Finance Institutions & Banks for lending to MSME & small borrowers.  National Housing Bank (NHB) has sanctioned its entire facility of ₹ 10,000 crore to Housing Finance Companies.  This refinance by SIDBI & NHB is in addition to ongoing schemes through which over ₹ 30,000 crore has been sanctioned. NBFCs & MFIs are being further helped under the Extended Partial Guarantee Scheme where approvals have crossed ₹ 5500 crore. Transactions for another ₹ 5000 crore are under process of approval while certain other deals are currently under negotiation.

Emergency credit line guarantee expands capped additional lending for eligible MSMEs, improving liquidity access and restart capacity. Emergency Credit Line backed by a Government guarantee has enabled banks to sanction and disburse substantial loans to MSMEs to restart operations, permitting eligible enterprises to obtain additional credit as a percentage of existing borrowings at capped interest rates. Complementary measures include refinance facilities to non-bank lenders and housing financiers to boost lending to small borrowers, and an Extended Partial Guarantee Scheme providing contingent support to NBFCs and MFIs with approvals and further transactions underway.