NEW DELHI, May 10 (Agencies): As part of a stimulus package for the coronavirus-hit economy, the Government is working on a credit guarantee scheme to enable banks to provide additional 10-15 per cent working capital to MSMEs for payment of wages, sources said.
Currently, banks are offering an extra line of credit of 10 per cent based on working capital limits, which the government intends to increase further.
Since units are closed due to lockdown and there has been no operation for the past two months, most micro, small and medium enterprises (MSMEs) do not have money for paying wages and financial assistance for them is under consideration of the Government, the sources said.
One of the proposals under consideration is to provide 10-15 per cent additional line of credit by banks over the working capital limit of the MSME sector, which is the largest employer in the country after agriculture.
This loan, especially for wage payment, will be backed by a proposed credit guarantee fund so that lenders’ money is secured in case of default by any borrower, the sources added.
The MSME sector contributes over 28 per cent of the GDP and more than 40 per cent of exports, while creating employment for about 11 crore people.
Public sector banks have sanctioned loans worth Rs 42,000 crore to the MSME sector and corporates since the start of the lockdown under the COVID-19 Emergency Credit Facility to provide liquidity for survival.
With the lockdown coming into effect from March 25, state-owned banks opened COVID-19 Emergency Credit Facility under which 10 per cent top-up loan is given over their working capital limit, subject to a maximum of Rs 200 crore.
Till now, the banks have sanctioned Rs 27,426 crore worth loans to MSMEs, as per data collated by the government.
In addition, corporates with deep pockets have availed Rs 14,735 crore loans.
In terms of numbers, about 10 lakh MSMEs and 6,428 corporates have availed the benefit so far.
At the same time, many MSMEs and corporates have also availed the three-month moratorium offered by banks as per the Reserve Bank of India (RBI) guidelines.
Finance Minister Nirmala Sitharaman had last week said as many as 3.2 crore borrowers have taken advantage of the three-month moratorium scheme on repayment of loans announced by the RBI to help people tide over liquidity issues caused by the coronavirus crisis.
“PSBs complemented RBI on loan moratorium. Their effective communication & proactive actions ensured that over 3.2 cr. A/c availed 3-month moratorium. Quick query redressals allayed customer concerns. Ensuring responsible banking amid #lockdown,” she had tweeted.
She also said state-owned banks have sanctioned loans worth Rs 5.66 lakh crore to borrowers during March and April, and disbursement will start soon after the lockdown is lifted.