Guaranteed loan scheme extended till FY22 end; micro-finance institution scheme used up in 75 days

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September 30, 2021 3:00 AM

As of September 24, loans sanctioned under various avatars of the scheme (ECLGS 1.0, 2.0 and 3.0) to about 1.15 crore businesses stood at Rs 2.86 lakh crore, the finance ministry said.

Similarly, businesses in the severely-hit sectors specified under the ECLGS 3.0, who have not tapped the ECLGS, can now avail of credit support up to 40% of their credit outstanding as of March 31, 2021, subject to a maximum limit of Rs 200 crore per borrower.Similarly, businesses in the severely-hit sectors specified under the ECLGS 3.0, who have not tapped the ECLGS, can now avail of credit support up to 40% of their credit outstanding as of March 31, 2021, subject to a maximum limit of Rs 200 crore per borrower.

The government on Wednesday extended the validity of its Rs 4.5-lakh-crore guaranteed loan scheme for companies and individuals by six months through March 2022 or until the limit is used up, whichever is earlier.

It also expanded the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) to benefit a larger number of Covid-hit businesses ahead of the festival season and expedite the pace of offtake that has slowed of late, following a strong response in the initial months of its launch last year.

As of September 24, loans sanctioned under various avatars of the scheme (ECLGS 1.0, 2.0 and 3.0) to about 1.15 crore businesses stood at Rs 2.86 lakh crore, the finance ministry said.

About 95% of the guarantees issued are for loans sanctioned to micro, small and medium enterprises.

As per the latest decision, existing borrowers under the ECLGS 1.0 and 2.0 would qualify for additional credit support of up to 10% of the total outstanding loan as of February 29, 2020, or March 31, 2021, whichever is higher.

Businesses that have not received assistance under the scheme (ECLGS 1.0 or 2.0) can avail credit support up to 30% of their outstanding credit as of March 31, 2021.

Similarly, businesses in the severely-hit sectors specified under the ECLGS 3.0, who have not tapped the ECLGS, can now avail of credit support up to 40% of their credit outstanding as of March 31, 2021, subject to a maximum limit of Rs 200 crore per borrower.

Incremental credit can also be availed of within these limits by existing ECLGS borrowers, whose eligibility rose because of the change in cut-off date to March 31, 2021 from February 29, 2020.

Accordingly, borrowers who have already received assistance under the scheme and whose credit outstanding as of March 31, 2021 (excluding support under ECLGS) is higher than the level on February 29, 2020 will be eligible for incremental support within the cap stipulated under ECLGS 1.0, 2.0 or 3.0, the ministry said.

While sanctions under the scheme would have to be granted within the March 2022 deadline, the last date of disbursement has also been extended by six months through June 2022.

As part of its stimulus package, the Centre had on June 28 enhanced the limit of loans under the ECLGS by Rs 1.5 lakh crore from the initial target of Rs 3 lakh crore to soften the second Covid wave blow.

The ECLGS 1.0 was announced as part of the government’s Rs 21-lakh-crore relief package in May 2020. The loans were meant to support borrowers in meeting their operational liabilities and restarting their businesses following Covid-induced disruptions.

Under this, the government had pledged full guarantee for up to 20% extra, collateral-free working capital loans, subject to the Rs 3-lakh-crore limit. While this scheme was originally meant for only MSMEs, the government has periodically broadened its scope to enable a large number of businesses and professionals to benefit from it.

Rs 7,500-cr scheme for MFI used up in 75 days

The finance ministry also said its Rs 7,500-crore credit guarantee scheme, announced on June 28, to facilitate concessional loans to an estimated 25 lakh small borrowers through micro-finance institutions (MFIs) is fully utilised within 75 days.

The scheme extended the support through 92 NBFC-MFIs/MFIs through 20 lenders. The government offers guarantee to banks for extending loans to the MFIs for on-lending up to Rs 1.25 lakh to each borrower, which is aimed at boosting consumption at the grassroot level.

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