FINANCE BILL 2022: ECLGS SCHEME EXTENDED TILL MARCH 2023 FOR MSME's

Last Updated On: March 21, 2022, 11:20 a.m.
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FINANCE BILL 2022: ECLGS SCHEME EXTENDED TILL MARCH 2023 FOR MSME's

INTRODUCTION:

The Emergency Credit Line Guarantee Scheme (ECLGS) has been formulated as a specific response to the unprecedented situation caused by COVID-19 and the consequent lockdown, which has severely impacted manufacturing and other activities in the MSME sector. The Scheme aims at mitigating the economic distress being faced by MSMEs by providing them additional funding of up to Rs. 3 lakh crore in the form of a fully guaranteed emergency credit line.

The Scheme would be applicable to all loans sanctioned under GECL during the period from the date of announcement of the Scheme to 31.10.2020, or till an amount of Rs three lakh crore is sanctioned under the GECL, whichever is earlier.

 

 

FEATURES OF ECLGS:

  • The entire funding provided under GECL shall be provided with a 100% credit guarantee by NCGTC to MLIs under ECLGS.
  • Tenure of the loan under Scheme shall be four years with a moratorium period of one year on the principal amount.
  • No Guarantee Fee shall be charged by NCGTC from the Member Lending Institutions (MLIs) under the Scheme.
  • Interest rates under the Scheme shall be capped at 9.25% for banks and FIs, and at 14% for NBFCs

 

ECLGS SCOPE EXPANDED AND SCHEME EXTENDED TILL 31.03.2023

Emergency Credit Line Guarantee Scheme (ECLGS) since its launch, has extended relief to over 1.15 crore Micro, Small and Medium Enterprises (MSMEs) and businesses. It has provided support to eligible borrowers in meeting their operational liabilities and restarting their businesses in the wake of disruptions caused by the COVID-19 pandemic.

As of 24th September 2021, loans sanctioned have crossed Rs. 2.86 lakh crore under the Scheme and out of total guarantees issued, about 95% of the guarantees issued are for loans sanctioned to Micro, Small and Medium Enterprises. The government has been receiving demands from various Industry bodies and other stakeholders to extend the scheme to ensure continued support to eligible sectors/businesses.

With a view to supporting various businesses impacted by the second wave of COVID 19 pandemic, it has been had decided to extend the timeline of the Emergency Credit Line Guarantee Scheme (ECLGS) till 31.03.2022 or till guarantees for an amount of Rs 4.5 lakh crore are issued under the scheme, whichever is earlier. Further, the last date of disbursement under the scheme has also been extended to 30.06. 2022.

 

Certain modifications have been made in the scheme to enable support to businesses impacted by the second wave of COVID

i. Existing borrowers under ECLGS 1.0 & 2.0 would be eligible for additional credit support of upto 10% of total credit outstanding as on 29.02.2020 or 31.03.2021, whichever is higher.

ii. Businesses who have not availed assistance under ECLGS (ECLGS 1.0 or 2.0), can avail credit support of upto 30% of their credit outstanding as on 31.03.2021.

iii. Businesses in sectors specified under ECLGS 3.0, who have previously not availed ECLGS, can avail credit support up to 40% of their credit outstanding as on 31.03.2021, to the maximum of Rs.200 crore per borrower;

iv. Incremental credit can be availed within these limits by  existing ECLGS borrowers whose eligibility increased because of change in cut off date to 31.03.2021 from 29.02.2020

v. Borrowers who have availed assistance under ECLGS and whose credit outstanding as on 31.03.2021 (excluding support under ECLGS) is higher than that on 29.02.2020 shall be eligible for incremental support within the cap stipulated under ECLGS.


 

The Government of India, on 13.05.2020, had announced the launch of the 'Distressed Assets Fund - Subordinate Debt for Stressed MSMEs' as part of the Aatma Nirbhar Bharat Package. The Government had earlier extended this scheme upto 31.03.2022. Now, on the basis of the requests received from the stakeholders of the scheme, the Government has decided to further extend this scheme till 31.03.2023, in order to keep the avenues of assistance to stressed MSME Units open

 

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