11 million avail Rs 2.75 lakh crore under govt’s credit guarantee scheme


More than 11 million businesses and individuals have availed nearly ₹2.75 lakh crore under the government’s credit guarantee scheme to provide working capital and emergency funds to help overcome the economic stress caused by the pandemic.

Banks have so far disbursed ₹2.13 lakh crore under the ₹4.5 lakh-crore Emergency Credit Line Guarantee Scheme (ECLGS) wherein the government guarantees repayments, latest available data shows.

The government is heavily backing on this scheme to prevent stress, particularly among businesses that would have otherwise found it difficult to raise funds under current circumstances, and provide some stimulus to the economy.
The industry said the initiative has helped companies avoid bankruptcy, but called for more direct support and demand-boosting measures to revive their businesses.

“Banks have been told to focus on new lending and not just repayment of old loans,” a finance ministry official said.

Last month, finance minister Nirmala Sitharaman announced a 50% increase in the limit under ECLGS to ₹4.5 lakh crore from ₹3 lakh earlier and included more sectors within its fold.

Private sector banks have lent the most (₹1.08 lakh crore) under the scheme, data up to July 3 shows, followed by state-run banks (₹90,315 crore) and NBFCs (Rs 14,047 crore).

As per data up to February 28, over 85% of these guarantees have gone to micro-enterprises – those with turnover of less than ₹5 crore and below Rs 1 crore investment in plant and industry.

Sectors that have used this scheme are diverse from trade to services to even small manufacturing companies which are mostly micro or small enterprises.

“The money has been used to restart businesses hit due to the lockdown, or, more importantly, as a liquidity means for working capital requirements,” said Suresh Khantanhar, deputy managing director at


According to a senior Uco Bank executive, the services sector has received over 90% of the loans given by the Kolkata-based lender under the scheme while the balance has gone to small and medium-sized manufacturing units.

Services and the contact-based sectors have been most impacted by the pandemic.

Indranil Pan, chief economist at Yes Bank, thinks the scheme has worked well and prevented many smaller companies from going bust. The guarantee-led scheme allows the government to make a targeted attempt at revival while minimising its losses, he said.

“If the government had opened a direct window, banks would have lent without checks and balances and if things didn’t pick up, these loans would have gone bad,” Pan said.

The scheme has now been extended to 30 sectors which will be valid till guarantees for the whole corpus are issued. The last date of disbursement under the scheme has been extended to December 31, 2021.

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