The Finance Ministry announced an extension of the tenor of the scheme for MSMEs and other entities that are eligible for restructuring as per the Reserve Bank of India (RBI) guidelines as of May 5, 2021. This also applies to the entities that had borrowed credit under ECLGS 1.0.
The government on Sunday announced a three-month extension of its Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) to September 30, 2021, from June 30, 2021, or till guarantees for an amount of Rs 3 lakh crore are issued under the fourth revision of the scheme dubbed ECLGS 4.0 in order to further support Covid-hit MSMEs.
The Ministry of Finance also announced a 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 with the interest rate capped at 7.5 per cent.
From 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 under ECLGS 1.0 will now be able to avail for a tenor of five years for their ECLGS loan. Meaning that repayment of interest only for the first 24 months with repayment of principal and interest in 36 months thereafter.
Additional ECLGS assistance of up to 10 per cent of the outstanding credit as of February 29, 2020, has been offered to borrowers covered under ECLGS 1.0 in line with restructuring as per RBI guidelines.
Manguirish Pai Raiker-Chairman, National Council for MSME said, “Additional ECLGS assistance of up to 10 per cent of the outstanding to the borrowers will enable them to overcome the present financial problems. It would be more appropriate if SME I classified units were allowed to avail these benefits. We had also requested automatic renewals of all statutory approvals for the running businesses without charges for the current year. The government as well as banks need to look at this situation with compassion. We hope state governments will also respond the way central government and RBI have responded.”
The ministry said on Sunday that the government has also removed the current limit of Rs 500 crore loan outstanding for eligibility under ECLGS 3.0 subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower. The scope of ECLGS 3.0 is expanded to cover the Civil Aviation sector by the Ministry.
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Bhoi Smrutirekha Dharanidhar