The rate of loan default or NPA under the Emergency Credit Line Guarantee Scheme (ECLGS) introduced after the onset of the COVID-19 pandemic was 4.8 per cent as of March 2022, according to a report.
The Non-Performing Assets (NPAs) are higher in the services and infrastructure sectors, which are largely driven by Covid like their contact intensiveness and reliance on movement of people, the report by credit information company Transunion Cibil said.
The government had introduced the scheme to help borrowers tide over the challenges posed by the pandemic by providing a 100 per cent guarantee to lenders with the aim that they extend credit facilities to businesses. It has been expanded and extended till March 2023, and now has an outlay of Rs 5 lakh crore.
The report said the scheme has been successful in helping Indian businesses navigate through the economic crisis caused by COVID-19 at a time when the entire country was put under lockdown.
“At an overall level, NPA rate of the borrowers who availed ECLGS is 4.8 per cent as of March 2022,” the report, which is based on ECLGS data provided by National Credit Guarantee Trustee Company, said.
“The timely infusion provided through ECLGS has significantly helped in resurgence of businesses across geographies and at the same time helped in controlling NPAs in MSME lending.
The NPA rate of 4.8 per cent for borrowers who availed ECLGS facility is lower than that of the borrowers who were eligible but did not avail the facility (6.1 per cent),” the company’s managing director and chief executive Rajesh Kumar said.
It said the traders’ segment has the largest share in the disbursement amount at over 20 per cent, and the NPAs in the segment are 4.15 per cent, while services which trails with a 19.2 per cent share has NPAs of 8.51 per cent. Infrastructure accounts for only 1.4 per cent of disbursements and the NPAs are 5.20 per cent.
Maharashtra has the largest share by quantum of the loans taken under the scheme at 13.6 per cent, followed by Tamil Nadu at 11.3 per cent, the report said, adding that when it comes to the availed rate, which is the total number of entities availing a loan among those eligible, Uttar Pradesh tops the list.
State-owned lenders have disbursed 42.8 per cent of the loans with an average ticked size of Rs 3.4 lakh, while their private sector peers have disbursed 43.1 per cent of the ECLGS loans with an average ticket size of Rs 7.5 lakh, it said.