Emergency Credit Guarantee Scheme Saved 12% MSME Loans From Turning Into NPA: SBI Report

Incentives provided under the ECLGS helped boost credit flow to MSMEs, according to the SBI report released on Monday.

<div class="paragraphs"><p>(Source: Unsplash)</p></div>
(Source: Unsplash)

Incentives offered under the Emergency Credit Line Guarantee Scheme has helped 14.6 lakh micro, small and medium enterprises accounts, and prevented 12% of outstanding MSME loans from turning bad, according to an SBI report released on Monday.

Incentives provided under the scheme helped boost credit flow to MSMEs, said the report filed by SBI's Economic Research Team.

"In absolute terms, MSME loan accounts worth Rs 2.2 lakh crore improved since inception of ECLGS for entire banking industry. This means that around 12% of the outstanding MSME credit has been saved from slipping into NPA because of the ECLG scheme."

The scheme, which was initially announced in May 2020 as part of the Covid-19 relief package, offered emergency loan facilities to MSMEs to tide over working capital and operational cost needs.

The report estimates that at least 14.6 lakh MSME accounts were prevented from turning into NPA due to it, which would have impacted 6.6 crore livelihoods.

As on March 2022, the NPA rate for borrowers who availed ECLGS stood at 4.8% as compared to a rate of 6.1% for those who didn't, according to data on the National Credit Guarantee Trustee Co. portal.

Utilisation levels, after availing the scheme, was measured at 77% over the course of four quarters, as against 4% for eligible borrowers who didn't avail credit under the scheme.

Key Findings

The SBI Research team had previously conducted a study on the scheme's impact on NPA and employment in January 2022.

It had noted that MSME loan accounts worth Rs 1.8 lakh crore were saved from slipping into NPA during the period—14% of the outstanding credit then. The current report is an update and uses the same methodology.


  • Of the 14.6 lakh MSME accounts said to have benefited from the scheme, almost 93.8% were from the micro and small category.

  • If the MSME units had slipped into NPA territory, then 1.65 crore workers would have become unemployed.

  • The trading sector, including kirana shops, has benefited the most from the scheme, followed by food processing, textiles and commercial real estate.

  • Private limited companies have gained the most, followed by proprietorship firms.

  • Among states, Gujarat has been the biggest beneficiary of the scheme, followed by Maharashtra, Tamil Nadu and Uttar Pradesh.

One Out Of Six Loan Accounts Under ECLGS Turned Into NPA: RBI Report