Credit and Finance for MSMEs: The Union Cabinet, chaired by the Prime Minister, Narendra Modi, on Wednesday approved increasing the limit of the Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 50,000 crore.
The limit has increased to Rs 5 lakh crore from the previous limit of Rs 4.5 lakh crore. The additional amount has been assigned only for the enterprises in hospitality and related sectors.
The Finance Ministry had decided on enhancing the limit as the sector was struggling to recover from the blow of the pandemic.
The additional amount would be made available to the enterprises in the hospitality and related sectors till the validity of the scheme which is March 31, 2023.
The increase in limit is sought to help the affected industries to meet their operational liabilities and henceforth continue their business as the lending institutions will be incentivised to provide them additional credit of up to Rs 50,000 crore at low cost.
Loans of about Rs 3.67 lakh crore were sanctioned under ECLGS up to August 5, according to the government’s data.
Finance Minister Nirmala Sitharaman in the Union Budget 2022-23 had announced to extend validity of ECLGS upto March, 2023 and increase in the limit of guaranteed cover of ECLGS by Rs 50,000 crore to the total cover to Rs 5 lakh crore to help MSMEs recover from the losses during the pandemic and subsequent lockdowns.