Now, even defaulters can borrow more – Times of India

MUMBAI: In a transfer that may allow even delinquent debtors to avail of further financial institution loans, the federal government on Friday prolonged the scope of its Emergency Credit Line Guarantee Scheme to these with reimbursement overdues of as much as 60 days.
The division of monetary companies mentioned the ability can be out there to 26 careworn sectors recognized by a committee headed by former ICICI Bank chief Ok V Kamath. The record contains every little thing from healthcare, aviation and company shops to energy, cement, development and textiles.
So debtors from these sectors with excellent loans of Rs 50-500 crore can avail of the particular facility.

The modification to the Rs 3 lakh crore ECLGS was introduced as more cities went underneath a contemporary lockdown following a contemporary wave of Covid-19 instances. Around 80% of the scheme is known to have been utilized which leaves round Rs 60,000 crore value of loans out there underneath the scheme that was initially meant for micro, small and medium enterprises that have been going through a liquidity crunch.
With MSME models not utilizing up your entire restrict, the federal government first prolonged it to professionals earlier than opening it to the hospitality, journey and tourism sectors, which have been hit laborious by Covid-19.
Now, the scheme might be out there to borrower accounts categorized as Special Mention Account (SMA)-0 or SMA-1 as of February 29, 2020. These accounts are these the place the overdue interval is between 31 to 60 days. Initially, this facility was out there to solely those that have been updated with their funds.
The contemporary funding, backed by a authorities assure, can assist these debtors faucet loans from banks, and even clear their previous dues, enabling companies to return again on monitor because the demand state of affairs normalises.
The authorities has mentioned that the scheme can be out there to loans sanctioned underneath the assured emergency credit score line throughout the interval from May 23, 2020, to June 30, 2021, or until ensures for an quantity of Rs. 3 lakh crore are issued, whichever is earlier.
While some analysts have expressed fears that guaranteeing loans to careworn debtors would solely conceal the stress, credit standing companies say that this isn’t a credit score damaging for lenders.
“This cannot be termed as evergreening for several reasons. First, the earlier limits of 20% will not be enough to cover the loan repayment for the stress which may continue for a longer period. Second, since the loans are guaranteed by the government the banks are not increasing their credit exposure to the borrower. Third, most of the loans under the scheme have gone to borrowers with standard accounts and since the scheme has further headroom for new sanctions, that is being made available to borrowers in need,” mentioned Anil Gupta, vp, monetary sector rankings ICRA.
According to Gupta, it is a pragmatic determination from the macroeconomic standpoint as it would assist companies and save jobs.