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Borrowing low among small businesses

According to lenders in the country, small businesses mainly belonging to Micro Small and Medium Enterprises ( MSME) sector in India are not availing fresh loans due to uncertainty in demand, despite being given extra credit lines through enhanced borrowing limits. Official data from the government demonstrated that under the emergency credit line guarantee scheme (ECLGS) scheme, public and private sector banks have sanctioned loans worth over INR 79,000 crore as of 20 June, of which only INR 35,000 crore have been disbursed.

Bankers point out that while borrowers are queuing up for increasing their limits through fresh loan sanctions, many remain hesitant to actually withdraw fresh funds, putting lenders in a spot. “They are waiting it out to see whether they need the money. In fact, a large number of people said that please sanction me the extra credit, but I do not need the money. There is a great amount of uncertainty and hopefully July and August will help us understand how it will play out,” C S Setty, managing director, State Bank of India (SBI), India’s largest bank stated.

 

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