Banks urge Centre to extend emergency credit guarantee for small businesses till March next year

With rising commodity prices, FISME wants the abolition of import duties on steel, copper, aluminum and polymers. (Representational Image; Source: ShutterStock)

The Indian Banks' Association (IBA) has urged the government to extend the Emergency Credit Line Guarantee Scheme for micro, small and medium enterprises (MSME) by a year till March 2023, CNBCTV18 reported.

The scheme aims to provide 100 percent guaranteed coverage to banks, non-banking financial companies (NBFCs) and other lending institutions in order to enable them to extend emergency credit to business entities that have suffered due to the pandemic and are struggling to meet their working capital requirements.

IBA also sought additional 10 percent credit facility for companies that fall under this scheme. Additionally, the inclusion of SMA-2 (special mention accounts) under the scheme is also on the agenda.

SMAs are accounts that have defaulted or are showing repayment stress but have not yet been classified as non-performing assets or NPAs.

Currently, SMA-2 accounts with a duration of up to 60-90 days are not included in the scheme.

Other relief measures which have been asked for include the removal of outstanding loans and business size caps for MSMEs under the scheme. Presently, there is a cap of Rs 50 crore on such loans and Rs 250 crore on business size.

(This is a developing story)