The government will not extend the Emergency Credit Facility Guarantee Scheme (ECLGS) for Micro, Small and Medium Enterprises (MSME) from October onwards. Under the scheme, the target is to distribute a loan of Rs 3 lakh crore to MSMEs with a 100% guarantee.
Sources said that to date only 65 percent of the loan amount has been sanctioned under the scheme. Despite this, the plan period is likely to be extended after 31 October. The objective of the scheme was to provide easy loans to small and medium-scale industries facing the financial crisis in the Kovid-19 epidemic.
In this, the government is taking full guarantee of the debt of the enterprises and is also exempting interest payments for one year. Not only this, a subsidized loan is being provided by banks at a fixed rate of nine percent, while the average interest of MSME loan is 13-14 percent.
Professionals are also getting the benefit of the scheme
On August 1, the government extended the scope of the scheme, allowing doctors, advocates, and CAs to provide loans for business purposes. Apart from this, the upper limit of loans on companies was also increased from 25 crores to 50 crores by February 29. That is, companies that have a debt of up to 50 crores till February, can take a guaranteed loan. A total loan of Rs 1.87 lakh crore has been sanctioned under the scheme till October 5, 2020.