NEW DELHI: The government could include cooperative banks as a lending institution under the Emergency Credit Lines Guarantee Program (ECLGS) which has been announced to support micro, small and medium enterprises (MSMEs) in trouble.
MSME Minister Nitin Gadkari said the Minister of Finance will take a decision in this regard soon.
“The Minister of Finance explained that due to dual regulation and supervision, cooperative banks are not included as Member Credit Institutions (MLIs) under ECGLS. However, data regarding their financial situation is being collected from state cooperative banks and urban cooperative banks for inclusion as IMLs under the program, in consultation with the Reserve Bank of India, depending on availability. from the program margin, ”Gadkari told the MSME conclave organized by the FICCI Karnataka State Council.
Currently, all public sector banks and private sector banks and non-bank financial corporations (NBFCs) have provided loans under ECGLS.
ECGLS was announced as part of the government program ??A 20 trillion financial package to help the poor and small businesses overcome the covid-19 crisis, by providing them with additional financing of up to ??3 trillion in the form of a fully secured emergency line of credit.
“The main objective of the program is to encourage member credit institutions (MLIs), i.e. banks, financial institutions (FIs) and non-bank financial corporations (NBFC) to increase access and allow the availability of an additional financing facility. to MSME borrowers, given the economic distress caused by the covid-19 crisis by providing them with a 100% guarantee for any loss they may suffer due to non-repayment of GECL funding (emergency credit line guaranteed) by borrowers, ”according to an official statement released by the government in May.
Gadkari said the disbursement at the moment is only ??1.2 trillion, compared to the target of ??3000 billion, cooperative banks may be authorized to lend under this program.
Cooperative institutions play a crucial role in financial inclusion in rural and urban areas. According to an RBI report, there were 1,551 urban cooperative banks as of March 31, 2018 and 96,612 rural cooperative banks as of March 31, 2017, the latter accounting for 65.8% of the total asset size of all cooperative banks.
Regarding the issue of late payments to MSMEs, the Minister said he has urged all ministries, departments and state-owned enterprises to clear outstanding invoices from MSMEs within 45 days and the MSME Ministry is closely monitoring the complaints. deposited on the digital portal – SAMADHAN.
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