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

While 87% of the total ECGLS loan accounts belong to micro enterprises, they took 24% of total amount disbursed.
<div class="paragraphs"><p>A vegetable market. (Source: Stephanie Liao/Unsplash)</p></div>
A vegetable market. (Source: Stephanie Liao/Unsplash)

Credit growth to micro, small and medium enterprises can be attributed to loans given under the emergency credit line guarantee scheme, but about one-sixth, by number, are turning into non-performing assets, according to a report by the Reserve Bank of India.

Launched in May 2020 to help cushion the adverse impact of the pandemic on businesses, a total of Rs 2.82 lakh crore was disbursed under the scheme as of September 2022. Commercial banks disbursed Rs 2.46 lakh crore out of the overall amount, the Financial Stability report said.

"Disaggregated analysis of borrowers availing the ECLGS indicates that majority of the smaller borrowers belonged to the micro enterprises category," the report said.

While 87% of the total loan accounts under ECLGS belong to micro enterprises, they took on 24% of the total loans disbursed under the scheme.

One-third of such loans was availed by businesses other than micro, small and medium enterprises, which indicates the broad stress generated by the pandemic, the report said.

Even though micro enterprises availed 24% of the loans disbursed under the ECLGS, their share in overall NPAs stood at 43% as of September.

Private banks utilised the ECLGS more than public sector lenders, according to the report. The average amount disbursed to repeat borrowers of private banks was almost double that of public sector banks, it highlighted.

Services and trade have the largest share of NPAs among different sectors that availed ECLGS loans, the report added.


Jaspreet covers banking and finance for BQ Prime. He is...more
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