Implementation of Emergency Credit Line Guarantee Scheme (ECLGS) in Punjab: An Assessment of Performance of Scheduled Commercial Banks

Satish Verma ()
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Satish Verma: Centre for Research in Rural and Industrial Development (CRRID)

A chapter in Covid-19 Pandemic and Economic Development, 2021, pp 115-124 from Springer

Abstract: Abstract The impact of Covid-19 has been devastating across all the sectors in the economy. The over-arching financial stimulus of over Rs. 20 lakh crores announced to infuse liquidity into the system, and to incentivize banks as well as the institutional players, is intended to enable them to revive the stressed sectors. Of the various measures, the most significant is the Emergency Credit Line Guarantee Scheme (ECLGS), announced on May 13, 2020 by the Union Finance Minister, Nirmala Sitharaman, to help the strapped micro, small and medium enterprises (MSMEs). It is an ambitious scheme which has been provided to the financial institutions and the non-banking financial companies (NBFCs). ECLGS may have issues including those related to the way it has been announced, but more importantly, its success depends on how it is implemented by the banks. For instance, loans offered under the scheme are neither collateral free nor these are default risk free for banks. Broadly, the brief concludes that the RBI should permit restructuring of NPA loans in such a manner that the units, which stand excluded because of the retrospective implementation of the scheme, could become eligible for loans under it, restart and revive. Office of the State Level Bankers’ Committee (SLBC), Punjab is the data source for this brief, and the analysis pertains to the Covid period.

Date: 2021
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DOI: 10.1007/978-981-16-4442-9_10

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