31 Mar , 2022 By : monika singh
The government said on Wednesday it has expanded the scope of its flagship guaranteed loan scheme and extended its validity by a year through March 2023, in sync with the Budget announcements.
The finance ministry has also extended relief under the Rs 5-trillion emergency credit line guarantee scheme (ECLGS) to hospitality, civil aviation and related enterprises. The scheme was initially launched to help MSMEs but was later expanded to benefit bigger firms in select sectors as well as professionals hit by the pandemic.
As per the new norms, companies in the hospitality, civial aviation, travel and tourism industry can now borrow up to 50% of their highest fund-based credit outstanding, as against 40?rlier, according to a finance ministry statement. Nevertheless, the borrowing by a single MSME from the hospitality, travel and tourism industry is still capped at Rs 200 crore.
However, the borrowing limit for an aviation player has been raised to Rs 400 crore from Rs 200 crore earlier.
The ministry said, to reduce the cost of accessing non-fund-based credit, bank guarantees, letters of credit and other non-fund based facilities sanctioned under the latest version of the scheme (ECLGS 3.0) will be issued without any cash margin. The fee or commission will be capped at 0.5% per annum.
The extension of the ECLGS validity and the widening of its scope will benefit a wider pool of businesses that haven’t been able to tap the scheme yet, as economic recovery has been dealt a fresh blow by the Omicron spread in January and the current Ukraine crisis, according to banking sources.
As of March 25, loans sanctioned under ECLGS have crossed Rs 3.19 trillion, and about 95% of the guarantees issued are for loans sanctioned to micro, small and medium enterprises.
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