New Delhi. The worst hit of the Corona crisis has been on Micro, Small and Medium Enterprises (MSMEs). The central government gave loans of Rs 9.5 lakh crore during the financial year 2020-21 to get this sector out of the crisis, which is 40 percent more than the previous year. Earlier in the financial year 2019-20, loans worth Rs 6.8 lakh crore were given to MSMEs. MSME Pulse by SIDBI and TransUnion CIBIL states that due to the Emergency Credit Line Guarantee Scheme (ECLGS), there has been an increase in the loans given to MSMEs.
Loan demand improved due to ECLGS
According to the report, the total loan given to the commercial sector of the country till March 2021 increased by 0.6 percent year-on-year to Rs 74.36 lakh crore. In this, the share of the loan book of MSMEs stood at Rs 20.21 lakh crore, which is 6.6 percent higher on an annual basis. According to the report, there has been an increase in the demand for loans after the relaxation of all restrictions, including the lockdown, due to the reduction of the effect of the first and second wave of the epidemic. There was a 76 per cent decline in commercial loan demand during the first wave, but after ECLGS, the demand improved to pre-Covid-19 levels.
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There has also been a big improvement in the perception of small industries
SIDBI Chairman and Managing Director Sivasubramaniam Raman said that due to ECLGS, 40 percent increase in credit to MSMEs as well as business sentiment among small scale industries has also improved. He said that the loan figures show that the rate of lending to new customers of banks has reached the level before Corona. He hoped that with the help given to the healthcare, travel and tourism industries, the demand for credit in the MSME sector will increase.
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Lenders avoiding giving loans to new companies
It has been said in the report that in the current environment, lenders are hesitant to take more risk. Therefore, giving loans to new companies is being avoided. Due to this the number of new MSMEs in CIBIL Rank (CMR) 8-10 categories has decreased. At the same time, this shortfall has been compensated by the increasing number of new entities in CMR 6-7 categories. Explain that CIBIL rank shows the economic condition and paying capacity of MSMEs.
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