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COVID Emergency Credit Facility for all businesses, not just MSMEs, clarifies FM Sitharaman

The Emergency Credit Line Facility mandates banks to provide term loans to MSMEs and businesses with Rs 100 crore turnover and Rs 25 crore amounting to 20 per cent of their outstanding credit as on February 29, 2020

twitter-logoBusinessToday.In | June 8, 2020 | Updated 20:56 IST
COVID Emergency Credit Facility for all businesses, not just MSMEs, clarifies FM Sitharaman
At a FICCI event, FM Nirmala Sitharaman assured that the issue of liquidity has been addressed fairly clearly (File photo)

Finance Minister Nirmala Sitharaman has clarified that the Emergency Credit Facility announced under the first tranche of Atma Nirbhar Bharat stimulus package covers all businesses, and not just MSMEs. Addressing the FICCI National Executive Committee members, the Finance Minister assured all possible government support to industry with the intent of supporting Indian business and reviving the economy.

"We are committed to intervene if any of your members have a problem," FM Sitharaman said.

The Emergency Credit Line Facility mandates banks to provide term loans to MSMEs and businesses with Rs 100 crore turnover and Rs 25 crore amounting to 20 per cent of their outstanding credit as on February 29, 2020. The key factor of the scheme is that government stands guarantee for the loans disbursed to MSMEs.

ALSO READ: 1.5 lakh MSMEs utilise Rs 13,500 crore of govt's credit line in 10 days

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. No guarantee fee or fresh collateral is required for the emergency credit line. There is no moratorium on interest payable during the period, though.

FM Sitharaman also said that the government will consider an extension in the deadline for availing the 15 per cent corporate tax rate on new investments. She suggested the industry to submit their recommendations related to the ministry of corporate affairs or SEBI deadlines so that necessary steps could be taken. "I will see what can be done. We want industry to benefit from the 15 per cent corporate tax rate on new investments and I take your point for considering an extension in the deadline of March 31, 2023," she said.

ALSO READ: Rahul Gandhi accuses Centre of refusing to provide cash support to people, MSMEs

On the question of liquidity, FM Sitharaman said, "We have fairly clearly addressed the issue of liquidity. There is definitely the availability of the liquidity. We will look into it if there are still issues." She further added that every government department has been told to clear dues and if there is any issue with any department, the government will look into it.

Regarding reduction in GST rates in the badly affected sectors, FM said, "GST rate reduction will go to the (GST) Council. But the council is also looking for revenue. The decision for reduction in rate for any sector has to be taken by the Council".

ALSO READ: Coronavirus crisis: Banks burden MSMEs with 'avoidable' paperwork for collateral-free loans

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