There is no need to judge the viability of the loan proposals if the guarantee is taken by the Government of India. The statement was made by the Finance Minister while reviewing the GECL target achievement. The Emergency Credit Line Guarantee Scheme (ECLGS), micro, small and medium enterprises (MSMEs) can avail loans from the banks with maximum of 20% of their existing outstanding as on 28th Feb 2020.
“Now I am pushing the banks saying that it’s not their risk, we have taken the risk on ourselves, they should now facilitate the process…”We have very clearly told banks that they are not going to sit on judgement of anybody’s viability. Now it is the question of giving them resources, hand holding them so that they survive,” Sitharaman added.
As of July 23, 2020, the total amount sanctioned under the 100 per cent Emergency Credit Line Guarantee Scheme by public and private sector banks stands at Rs 1,30,491.79 crore, of which Rs 82,065.01 crore has already been disbursed.
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If banks are not to judge the viability of the loan proposals, government must ensure the implementation of banker less credit system where the loan will directly be credited through AEPS (Aadhaar Enable Payment Systems). It will be fast, easier and cheapest mode for granting loans.
