The Reserve Bank of India has issued guidelines on ‘Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises’ to Scheduled Commercial Banks (excluding Regional Rural Banks) in March 2016. With the issuance of these Guidelines, the concept of sickness no longer exists.

Under this Framework, banks have been advised to identify incipient stress in the MSME accounts and refer it to the Committees formed under the framework for Corrective Action Plan for rectification, restructuring and recovery.

The Emergency Credit Line Guarantee Scheme (ECLGS) was announced as part of the Aatma Nirbhar Bharat Package in May, 2020 to support eligible MSMEs and other business enterprises to meet their operational liabilities and resume businesses in view of the distress caused by the COVID-19 crisis.

This scheme covers all the sectors of the economy. Under this, 100% guarantee is provided to Member Lending Institutions (MLIs) in respect of the credit facility extended by them to eligible borrowers. The scheme was in place till 31.03.2023. The ECLGS was implemented by Department of Financial Services (DFS), Ministry of Finance.

As reported by DFS, under ECLGS as on 31.03.2023, total 1.19 crore guarantees amounting to Rs. 3.65 lakh crore have been issued. Out of the total, 1.13 crore Guarantees amounting to Rs. 2.41 lakh crore have been provided to MSMEs.

State Bank of India (SBI) came out with a research report dated 23.01.2023 on ECLGS authored by its Group Chief Economic Advisor. It has been reported that almost 14.60 lakh MSME accounts were saved due to ECLGS scheme (including restructured), of which about 98.30 % of the accounts were in Micro and Small categories, were saved.