GOVERNMENT TO EXPAND THE AMBIT OF CREDIT GUARANTEE SCHEME

GOVERNMENT TO EXPAND THE AMBIT OF CREDIT GUARANTEE SCHEME

A corpus of Rs 41,600 crores was set up by the government for this purpose.

 

Aiming to revive the economy amid the COVID-19, the Government of India has expanded the ambit of the Emergency Credit Line Guarantee Scheme (ECLGS) to cover the individual professionals who are involved in running a large portion of MSME sector. 


Based on the demands from various trade bodies the government of India has tweaked the emergency credit line guarantee scheme (ECLGS). It has now doubled the upper limit of outstanding loans to Rs 50 crores.

ECLGS which was already providing a 20% collateral-free credit, has also allowed the inclusion of individual loans to various professionals such as doctors, lawyers, etc. for business reasons.

Financial services Secretary Debasish Panda said, “We have decided to cover individual loans given to doctors, chartered accountants for business purposes under the scheme.”
 

He also said, “A total of around Rs 1.37 lakh crores has been sanctioned under the scheme by member lending institutions to around 40 lakh accounts, of which around Rs 87,000 crores has been disbursed. The modifications in the ECLGS scheme are likely to make an additional Rs 1 lakh crores eligible.”


Sanctioning of these loans to professionals will be done according to the procedures already laid down for the companies. The maximum amount of guaranteed emergency credit line (GECL) has also been increased to Rs 10 crores from the existing Rs 5 crores.
 


The validity of the scheme is till October 31, 2020, and the overall ceiling remains at Rs 3 lakh crores. The Cabinet on May 20, 2020, has given approval for additional funding of Rs 3 lakh crores at the rate of 9.25% per annum for the stressed MSME sector.
 

This scheme will provide guaranteed coverage for funding of up to Rs 3 lakh crores to the eligible MSME entities. National Credit Guarantee Trustee company will provide the 100% guarantee coverage. 
 

A corpus of Rs 41,600 crores was set up by the government for this purpose. The spread duration of this corpus is distributed over the current and the next three financial years.
 

All MSME borrower accounts with an outstanding credit of up to Rs 50 crores as on February 29, 2020, regular SMA-0 and SMA-1 accounts with an annual turnover of up to Rs 250 crores are eligible for funding under the scheme.
 

This scheme will cover all the loans sanctioned during the time period from the announcement date to October 31, 2020, or till the amount of Rs 3 lakh crores gets sanctioned under the GECL whichever is earlier.

Mr. Debashish Panda shared details of other schemes under ‘Aatmanirbhar Bharat Abhiyan’, which are as follows:

  • Sanctioning of Rs 90,000 crores to 1.1 crores Kisan Credit Cardholders to help farmers.
     
  • PSBs have purchased bonds and commercial papers worth Rs 18000 crore. The same has been issued by Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs).
     
  • Extension of the scheme time period from June 30, 2020, to March 31, 2021, for the purchase of pooled assets of the stressed entities.
     
Edited By Minu Mishra

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