Micro, Small and Medium Enterprises (MSMEs) have responded enthusiastically to Centre's Guaranteed Emergency Credit Line (GECL). Within 10 days of rules for the scheme being notified, more than 1.5 lakh beneficiaries have reportedly availed of the facility.
A senior Finance Ministry official told India Today TV that loans worth Rs 13,500 crore have been been sanctioned till Friday for 1.5 lakh successful MSMEs and businesses under the scheme. Out of this Rs 6,000 crore has already been disbursed.
Centre had announced the Guaranteed Emergency Credit Line scheme last month as part of its Atma Nirbhar stimulus package. It mandates banks to provide loans up to Rs 3 lakh crore to MSMEs and businesses with Rs 100 crore turnover and Rs 25 crore outstanding. Under the scheme, 20 per cent of outstanding credit is provided as a new loan. The key factor of the scheme is that government stands guarantee for the loans disbursed to MSMEs.
The scheme aims to benefit 45 lakh MSMEs and will continue till October 31, 2020, or till Rs 3 lakh crore is disbursed. The loans have a tenor of 4 years and a moratorium of 12 months on repayment of principal amount. There is no moratorium on interest payable during the period, though. Interest has been capped under the GECL scheme at 9.25 per cent with banks and financial institutions, whereas public sector banks have agreed to provide loans at 7.5 per cent.
Borrowers can pay back the principal amount in 36 instalments, but after the moratorium is over. Banks and NBFCs are expected to evaluate credit proposals under the GECL scheme by exercising prudent banking decision. The Union Cabinet had approved a corpus of Rs 41,600 crore for this scheme which would be spread over a period of four years, starting from the current fiscal.
"It is not a scheme for which a beneficiary has to apply. It is a pre-approved one, you have to say no to opt-out. Banks are reaching out to all eligible borrowers by sending them pre-approved loan letters that require zero collateral. The idea is not to make borrowers queue up and face harassment at the lending institutions," the Finance Ministry official told the channel.