Keeping in mind the disruption caused by second wave of COVID-19, the government has extended the scope of Emergency Credit Line Guarantee Scheme (ECLGS). Now, civil aviation sector will be eligible under ECLGS 3.0, stated finance ministry.
Speaking at a press conference about this government scheme, State Bank of India, Chairman, Dinesh Khara, said, "The banks will be able to build a book of Rs 2,000 crore through the expanded ECLGS." This is based on preliminary assessment. But he stated the banks are open as well.
Khara said this on Sunday in presence of IBA, Chairman Rajkiran Rai and IBA Chief Executive Officer, Sunil Mehta.
The limit under ECLGS has been set at Rs 3 lakh crore of that Rs 2.54 lakh crore has been covered. "Under ECLGS, Rs 2.54 lakh crore has been covered. There is still a window for Rs 45,000 crore," said IBA Chief Executive Officer, Sunil Mehta. "That window will depend how long it will take." These schemes announced today will exhaust the remaining window, Mehta added.
Aviation sector will be allowed but the upper ceiling for aviation sector is at Rs 200 crore, stated Mehta.
The validity of ECLGS is extended to September 30, 2021 or till guarantees for an amount of Rs 3 lakh crore are issued. Disbursement under the scheme permitted up to December 31, 2021.
Under ECLGS 4.0, 100 per cent guarantee cover to loans up to Rs 2 crore to hospitals/nursing homes/clinics/medical colleges for setting up on-site oxygen generation plants. The interest rate for the same capped at 7.5 per cent.
PSBs have set up a template approach to offer restructuring for individuals and MSMEs up to Rs 25 crore, the chairman stated. Meanwhile, Khara added restructuring was only availed by 60,000 customers as against 8 lakh plus eligible.
Khara added that these ECLGS is different from other schemes that are on going.
Banks are expected to create COVID loan book under Reserve Bank of India (RBI) guidelines, he added.
In a note Finance Ministry stated that ECLGS 4.0 will cover setting up on-site oxygen generation plants.
At present, the focus is to support the healthcare infrastructure.
Borrowers who are eligible for restructuring as per RBI guidelines of May 5, 2021 and had availed loans under ECLGS 1.0 of overall tenure of four years comprising of repayment of interest only during the first 12 months with repayment of principal and interest in 36 months thereafter. But they can now be able to avail a tenure of five years for their ECLGS loan that is repayment of interest only for the first 24 months with repayment of principal and interest in 36 months.
"Additional ECLGS assistance of upto 10 per cent of the outstanding as on February 29, 2020 to borrowers covered under ECLGS 1.0, in tandem with restructuring as per RBI guidelines of May 05, 2021," the ministry stated.
The ministry stated the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0 to be removed, subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower.
The ministry stated, "The modifications in ECLGS, would enhance the utility and impact of ECLGS by providing additional support to MSMEs, safeguarding livelihoods and helping in seamless resumption of business activity. These changes will further facilitate flow of institutional credit at reasonable terms."