The Centre has taken the decision to fine-tune its emergency credit guarantee scheme to give long-term relief to a broader section of small business borrowers. It widened the net of the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), which will now provide concessional loans to hospitals for establishing on-site oxygen generation plants.
Around 85% of this amount has already been employed. The scheme will be valid until September 2021 or until the guarantee sum of Rs 3 lakh crore is exhausted, the government said in a release. The last date of disbursal under the scheme has been protracted to December 31.
"On account of the disruptions caused by the second wave of COVID 19 pandemic to businesses across various sectors of the economy, the government has further enlarged the scope of the Emergency Credit Line Guarantee Scheme," it said.
Under ECLGS 4.0, it said, 100 per cent guarantee cover will be given to loans of up to Rs 2 crore to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants.
The interest rate on these loans has been capped at 7.5 per cent, which means the banks can offer loans less than this ceiling.
"Borrowers who are eligible for restructuring as per the RBI guidelines of May 5, 2021, and had availed loans under ECLGS 1.0 of overall tenure of four years comprising of repayment of interest only during the first 12 months with repayment of principal and interest in 36 months thereafter will now be able to avail a tenure of five years for their ECLGS loan i.e. repayment of interest only for the first 24 months with repayment of principal and interest in 36 months thereafter," the ministry said.
Also, the new scheme has made a provision of additional ECLGS assistance of up to 10 per cent of the outstanding as of February 29, 2020, to borrowers covered under ECLGS 1.0, in tandem with restructuring as per the RBI guidelines of May 5, 2021.
The government has also removed the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0, subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower.
Loans to the civil aviation sector were made eligible under ECLGS 3.0.
"Modifications in ECLGS would enhance the utility and impact of ECLGS by providing additional support to MSMEs, safeguarding the livelihoods, and helping in a seamless resumption of business activity. These changes will further facilitate the flow of institutional credit at reasonable terms," the ministry said.
The ECLGS 3.0 covered business enterprises in Hospitality, Travel & Tourism, Leisure & Sporting sectors, which had as of February 29, 2020, total credit outstanding not exceeding Rs 500 crore and overdue, if any, was for 60 days or less, on that date.
The tenor of loans granted under ECLGS 3.0 would be 6 years, including a moratorium period of 2 years.
The revised operational guidelines are being issued by National Credit Guarantee Trustee Company Ltd (NCGTC).
Till the February end, Rs 2.46 lakh crore of Rs 3 lakh crore were sanctioned under the scheme by commercial banks and non-banking financial companies (NBFCs).
The scheme was valid till October 2020 and later extended to November-end. The scheme was again extended in November as part of the Atmanirbhar Bharat 3.0 package till March 31, 2021, by including the 26 stressed sectors identified by the RBI-constituted KV Kamath committee.
The scheme was further extended for three months on April 1 and subsequently widened.
(With inputs from PTI.)
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