Industrial units apply for emergency credit | Ahmedabad News

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AHMEDABAD: Income shortfalls, falling demand, production shortfalls, skyrocketing commodity prices, and stretched payment cycles were among the worst legacies that hit industries after the 2020 lockdown. overheads and other operating expenses, several industries, in particular MSMEs, received emergency credit to tackle the disruption caused by the pandemic.
Clearly, the number of loans sanctioned under the Emergency Lines of Credit Guarantee Scheme (ECLGS) has increased by 140% in one year, according to the latest State Level Bankers’ Committee (SLBC) report.

The 170th meeting of the SLBC took place earlier this week, during which the report was released. It indicates that the number of industries applying for loans under ECLGS has increased from 1.5 lakh in the first quarter of 2021-2022 to 3.6 lakh in the corresponding quarter of this year. During the same period, the amount of sanctioned loans increased from Rs 7,480.29 crore to Rs 23,424 crore.
Cumulative disbursements at the end of the first quarter of 2021-2022 amounted to Rs 20,434 crore to Gujarat under the ECLGS.
“To cope with the overhead costs accumulated against a backdrop of shortfall and stretched payment cycles, a number of industrial units have taken out loans. Since the interest rate on loans granted under ECLGS was 7.5%, which is lower than that given to industries elsewhere, some units have also used these loans to repay other loans in order to be able to save on interest, ”said MM Bansal, head of SLBC. – Gujarat.
“The definition of MSMEs was changed by the Union Ministry of Finance last year by including service sector units in MSMEs and increasing the turnover limit to Rs 100 crore for that a unit be classified in MSMEs. As a result, more businesses have taken advantage of the emergency credit, made available under the Atmanirbhar Bharat relief program, ”Bansal added.
Sectors such as apparel, apparel and textiles, hospitality and tourism, among others, have experienced relatively slow recovery, industry estimates suggest, and have therefore attracted more borrowers for credit. emergency.
Industry players said that while demand is slowly picking up, piling up raw material costs since October 2020, this is also one of the reasons for the increase in the number of industrial units receiving credit from the industry. ’emergency.
“The prices of raw materials have doubled in all sectors, including real estate, chemicals, textiles, among others. After the lockdown, demand started to pick up and export orders started pouring in. To meet production needs in a context of rising costs, many industries have opted for emergency credit, ”said Hemant Shah, president of the Gujarat Chamber of Commerce and Industry (GCCI).

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