Credit guarantee scheme extended till June

NEW DELHI:  In what is sure to come as a relief to Covid-impacted businesses in the MSME sector, the Union Ministry of Finance announced on Wednesday that the Centre has both expanded the scope of, and extended the duration of the emergency credit line guarantee scheme (ECLGS).

The Rs 3-lakh crore ECLGS had been announced last year as part of the Covid-19 relief package rolled out by the Centre and involved offering Covid-hit businesses higher credit limits.

According to the finance ministry, the latest iteration of the scheme ECLGS 3.0 involve extending credit of up to 40 per cent of total credit outstanding across all lending institutions as of  February, 2020.

It will now also cover business enterprises in the Hospitality, Travel & Tourism, Leisure, and Sporting sectors that had, as on February 29, 2020, total credit outstanding not exceeding Rs 500 crore and overdues, if any, at 60 days or less as on that date. 

“In recognition of the continuing adverse impact of COVID-19 pandemic on certain service sectors, the government has now extended the scope of ECLGS through introduction of ECLGS 3.0,” the ministry said. 

The earlier ECLG schemes have also been extended in duration up to June 30, 2021 or till guarantees for an amount of Rs 3 lakh crore are issued. The schemes had been set to lapse on March 31, after having been extended twice already.

The scheme had initially been valid up to October 2020, but was subsequently extended to November-end and then again to March 31 by including the 26 stressed sectors identified by the K V Kamath-led RBI panel. “Last date of disbursement under the scheme has been extended to 30.09.2021.

The modifications introduced in the scheme, while providing an incentive to MLIs to enable availability of additional funding facility to the eligible beneficiaries will go a long way in contributing to economic revival, protecting jobs, and creating a conducive environment for employment generation,” the ministry said.

It further  announced that the tenor of loans granted under ECLGS 3.0 would be for 6 years, including a two-year moratorium.