Over 85% MSMEs still face liquidity crunch

Despite Rs 1.61 lakh crore getting sanctioned under Emergency Credit Line Guarantee Scheme (ECLGS), more than 85 per cent of the micro, small and medium enterprises (MSMEs) are still facing liquidity crunch.

As per the finance ministry data, till September

3, a total of Rs 1,61,017 crore or 53 per cent of the Rs 3 lakh crore ECLGS scheme has been sanctioned by different banks for the MSME sector reeling under the slowdown caused by the coronavirus pandemic. Of this, disbursements stood at Rs

1,13,713 lakh crore or 37 per cent.

However, these loans have been sanctioned for only those MSMEs which already had a loan outstanding with the banks.

“Of the total 6 crore MSMEs, 85 per cent do not have access to the formal banking system. The large majority has been facing issues even before the pandemic. The pandemic further enhanced their liquidity crunch. Among the MSMEs having access to formal credit, those who had a loan outstanding at the time of lockdown only were eligible for additional credit,” said Meghna Suryakumar, founder and CEO of Crediwatch.

The finance ministry data says that 41 lakh accounts have been sanctioned loans and 24 lakh have received it. The data does not specify the number of MSMEs which have been sanctioned or received credit. Even if each account is counted as an MSME, only 6.8 per cent of the MSMEs have received the additional credit.

“In the first half of this fiscal, hardly any new loan has been disbursed to new MSMEs. New entrepreneurs with fresh loan requirements too are looking at fast sanction and disbursal of loans with 2 per cent interest subvention. I hope and pray the banks announce some special loan schemes for the second half of this fiscal. Liberal loan programmes for existing MSMEs outside the institutional credit domain as on February 29, 2020 should be immediately planned and announced,” said Rajive Chawla, chairman, IamSMEofIndia.

Suryakumar finds a ray of hope coming from the fintech space. According to her, a few fintech players like Lendingkart and Capital Float have started financing the MSMEs outside the purview of formal banking. “Currently, their presence is quite small. But in the next five years, they would be financing a larger share of the unbanked MSMEs. The ongoing digitisation process will provide these MSMEs access to digital credit,” she said.

In order to get there, MSMEs will have to first survive the pandemic.