Centre may expand ambit of Emergency Credit Line Guarantee Scheme

NEW DELHI:  Having extended the deadline for the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs by one month, the government is now planning to include more businesses and professionals under its ambit since the scheme is struggling to meet the target of Rs 3 lakh crore.

The ECLGS was launched as a part of the Aatmanirbhar Bharat package announced by finance minister Nirmala Sitharaman in May to help MSMEs fight liquidity stress. 

The scheme has a corpus of Rs 3 lakh crore, but despite a push by the government, only Rs 1.48 lakh crore has been disbursed so far.  “We have received feedback from both the businesses and the banks. We are considering increasing the upper ceiling for outstanding loans and include more sectors under its ambit. If required, the deadline can be extended further,” a senior official from the finance ministry told this publication.

Under the scheme, banks provide fully guaranteed and collateral-free additional credit, up to 20 per cent of their credit outstanding as on February 29, 2020, to MSMEs, business enterprises, individual loans for business purposes, and MUDRA borrowers. Interest rates for loans taken under the scheme are capped at 9.25 per cent for banks and financial institutions (FIs), and at 14 per cent for non-banking financial companies (NBFCs). 

The tenor of loans provided under the scheme is four years, including a moratorium of one year on principal repayment. According to sata shared by the finance ministry, an amount of Rs 2.03 lakh crore has  already been sanctioned under the scheme to 60.67 lakh borrowers so far, of which Rs 1.48 lakh crore has been disbursed.