- The RBI's revised ECLGS offers extra liquidity support to MSMEs amid rising costs and uncertainty
- MAS Financial sees Rs 200-300 crore potential lending under the updated ECLGS, with disbursals by June
- Three-fourths of MAS Financial's loan book focuses on MSMEs, especially micro and small enterprises
The Reserve Bank of India's recent changes to the Emergency Credit Line Guarantee Scheme (ECLGS) could provide an additional liquidity buffer to micro, small and medium enterprises (MSMEs) at a time when businesses are grappling with higher input costs and lingering uncertainty, according to MAS Financial Services.
Speaking to NDTV Profit, Dhvanil Gandhi, Executive Director at MAS Financial, said the company has already identified between Rs 200 crore and Rs 300 crore of potential lending opportunities under the revised ECLGS framework and expects to begin disbursements before the end of June.
MAS Financial derives nearly three-fourths of its loan book from MSME lending, with a focus on micro-enterprises and small businesses. Gandhi described the revised scheme as a timely intervention that could help businesses bridge short-term liquidity requirements.
"This is a very welcome step by the RBI and the government to bring in a liquidity bridge considering the volatile environment that has emerged over the past few months," Gandhi said. This is after the central bank amended ECLGS norms, a move aimed at improving credit availability to MSMEs by lowering lender risk through government-backed guarantees.
Despite concerns around elevated commodity prices and supply-chain disruptions, Gandhi said working capital demand from MSMEs has remained resilient. "We were uncertain after the March quarter about how working capital demand would evolve, but demand has been pretty steady through the first quarter," he said. "Additional liquidity support can further aid growth."
The executive noted that higher raw material costs remain a key concern for many small businesses. However, a large section of borrowers has been able to pass on some of these increases to customers, limiting the impact on profitability.
While some industries have been affected more than others, MAS Financial remains constructive on the sector's outlook.
"If the current situation settles, we believe many businesses can be back on a stronger footing by Q3," Gandhi said.
MAS Financial currently has no outstanding exposure under the previous ECLGS programmes introduced during the pandemic. Under the latest version of the scheme, the company plans to engage eligible borrowers over the coming weeks and offer additional sanctioned limits where required.
According to Gandhi, the identified Rs 200–300 crore represents immediate lending potential, though actual utilisation will depend on borrower demand and business requirements over the next few quarters.
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