SBI Seeks Approval for Up to Rs 80,000 Crore in ECLGS 5.0 Loans

State Bank of India to Extend Up to Rs 80,000 Crore in Loans Under ECLGS 5.0 Scheme

The State Bank of India (SBI) may extend up to Rs 80,000 crore in loans to its customers under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 announced by the government, Chairman C S Setty revealed on Thursday. This move comes after the Union Cabinet approved ECLGS 5.0 with an overall outlay of Rs 2.55 lakh crore to provide additional working capital support to businesses affected by the ongoing geopolitical tensions in West Asia.

The ECLGS 5.0 scheme will be available to MSMEs and non-MSME borrowers impacted by the crisis, with a separate allocation of Rs 5,000 crore for airlines. Setty stated that the impact of the West Asia conflict has been broad-based, with second-order impacts visible across industries. He expressed confidence that the scheme's rollout will be seamless, with most operational issues expected to be resolved within the next 8-10 days.

According to an SBI assessment, over 1.1 crore beneficiaries across the banking system could potentially benefit from the scheme. The SBI chairman also highlighted the performance of earlier ECLGS versions launched during the Covid-19 pandemic, noting that the default rate under the scheme was lower than the average MSME default rate.

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Comparison of ECLGS 5.0 Scheme with Previous Versions

M Nagaraju, Secretary of Department of Financial Services, stated that the overall scheme size was determined based on banks' existing exposure and expected demand from affected sectors. The tenure for loans under the latest version has been extended to five years from four years earlier, while airlines have been given a repayment period of seven years considering the sector's longer recovery cycle.

Nagaraju added that all MSMEs are eligible under the scheme, while some non-MSME sectors such as power, telecom, sugar, and educational institutions have been excluded because they were assessed to be relatively insulated from the impact of the West Asia crisis.

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