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Govt extends scope of ECLGS for MSMEs till March 31, 2023

Govt extends scope of ECLGS for MSMEs till March 31, 2023

Eligible borrowers in the civil aviation sector are now permitted to avail of non-fund based emergency credit facilities.

As on March 25, 2022, loans sanctioned under ECLGS have crossed Rs 3.19 lakh crore, Finance Ministry said. As on March 25, 2022, loans sanctioned under ECLGS have crossed Rs 3.19 lakh crore, Finance Ministry said.

The Finance Ministry on Wednesday said that it has extended the scope and validity of emergency credit line guarantee scheme (ECLGS) for Micro, Small and Medium Enterprises (MSMEs) till March 31, 2023.

Further, the ministry has also extended relief to hospitality, civil aviation and related enterprises under ECLGS scheme after following up on the suggestions received in the post Budget consultations held by the Finance Minister Nirmala Sitharaman on 25th February 2022.

Companies in the hospitality, travel and tourism industry can now borrow up to 50 per cent of their highest fund-based credit outstanding, as against 40 percent, the government said in the statement.

However, the cap on maximum borrowing by a single MSME from the hospitality, travel and tourism industry still stands at Rs 200 crore.

Similarly, companies in the civil aviation industry can now borrow up to 50 percent of their highest fund-based credit outstanding, as against 40 percent of their credit outstanding as part of earlier iterations of the ECLGS scheme.

The cap on maximum borrowing by a single MSME from the aviation industry has been increased to Rs 400 crore from Rs 200 crore earlier.

Further, to lower their cost of accessing non-fund-based credit, bank guarantees, letters of credit and other non-fund based facilities sanctioned under ECLGS 3.0 will be issued without any cash margin and subject to a cap of 0.5 per cent per annum on the fee/commission. Individuals and proprietary concerns in the sectors covered under ECLGS 3.0 can also now avail of emergency credit facilities, the ministry added.

The ECLGS was announced as one of the key components of the Rs 2 trillion economic stimulus package under the 'Aatmanirbhar Bharat Abhiyan' in May 2020. It offers additional working capital finance in the form of a term loan to MSMEs and professionals. Initially, its corpus was Rs 3 trillion, but was eventually raised to Rs 4.5 trillion during the second Covid-19pandemic wave.

In September 2021, Ministry of Finance had extended the timeline of ECLGS to March 2022.

As on March 25, 2022, loans sanctioned under ECLGS have crossed Rs 3.19 lakh crore, and about 95 per cent of the guarantees issued are for loans sanctioned to Micro, Small and Medium Enterprises (MSMEs), the ministry informed.