Credit and Finance for MSMEs: ECLGS scheme is extended in view of the opening up of various sectors in the economy and the expected increase in demand during the ongoing festive season.
An amount of Rs 2.03 lakh crore has already been sanctioned under the ECLGS to 60.67 lakh borrowers so far.
Credit and Finance for MSMEs: The government today extended the Emergency Credit Line Guarantee Scheme by one month till 30 November 2020 or till the amount of Rs 3 lakh crore is sanctioned under the scheme, whichever is earlier. The decision is taken in view of the opening up of various sectors in the economy and the expected increase in demand during the ongoing festive season, according to the Ministry of Finance. The extension is expected to provide more opportunities to borrowers who have not availed of the scheme to obtain credit so far.
An amount of Rs 2.03 lakh crore has already been sanctioned under the Scheme to 60.67 lakh borrowers so far, while an amount of Rs 1.48 lakh crore has been disbursed, the statement said. The ECLGS scheme was announced as part of the Aatma Nirbhar Bharat Package to provide fully guaranteed and collateral-free additional credit to MSMEs, business enterprises, individual loans for business purposes, and MUDRA borrowers.
The credit is allowed up to the extent of 20 per cent of their credit outstanding as on 29 February 2020. Borrowers with credit outstanding up to Rs 50 crore as of the specified date, and with an annual turnover of up to Rs 250 crore are eligible under the scheme. While the interest rates under the scheme are capped at 9.25 per cent for banks and FIs, and 14 per cent for NBFCs, the tenor of loans is four years, including a moratorium of one year on principal repayment.
Meanwhile, small businesses of India were severely hit due to the pandemic and were brought to a near-standstill with the nationwide lockdown. With the government’s effort of providing an emergency credit line, borrowers could get loans easily while banks cherrypicked their credit portfolio. As a part of the Rs 21 lakh crore special economic package. The government had also announced the Partial Credit Guarantee Scheme (PCGS) 2.0 worth Rs 45,000 crore for non-banking financial companies (NBFCs) and microfinance institutions (MFIs).