Good news for small businesses as govt expands scope of its credit facility

Among other changes, the cash strapped civil aviation industry is now also eligible for getting loans under ECLGS.

The central government on Sunday announced some changes to its Emergency Credit Line Guarantee Scheme(ECLGS) to broaden its scope and provide relief to small businesses for a longer time period. The scheme, which has a total outlay of Rs 3 lakh crore, was first announced in May 2020 in the wake of a nationwide lockdown.

Releasing a statement on Sunday, the Ministry of Finance, headed by Nirmala Sitharaman said, ”On account of the disruptions caused by the second wave of COVID 19 pandemic to businesses across various sectors of the economy, government has further enlarged the scope of Emergency Credit Line Guarantee Scheme.”

A major announcement was the broadening of the scope of the scheme to include loans of up to Rs 2 crore that can be availed by hospitals, nursing homes and clinics to set up on-site oxygen generation plants. Interest rates for such loans have been capped at 7.5%.  This is an important step considering how the second wave of Coronavirus led to the extreme scarcity of oxygen for patients as most medical centres depended on an external supply of medical grade oxygen.

SBI Chairman Dinesh Kumar Khara also talked about the change and said, “As the capacities increase, these borrowers will also avail working capital loans. The banking system will remain quite open to help the healthcare system according to their need.”

Among other changes, the cash strapped civil aviation industry is now also eligible for getting loans under ECLGS.

Relief was also announced for existing borrowers under the scheme who can now get additional assistance of a maximum of 10% of outstanding dues as of 29 February 2020. The tenure of loans already disbursed has been increased from four to five years. In addition, the condition for the hospitality and tourism sectors to having pending loans of less than Rs 500 crore to be eligible for the scheme has been removed. It is to be noted that these sectors have been the hardest hit since the beginning of the pandemic last year.

According to a press release issued by the government, the scheme will remain valid till 31 September 2021 or till guarantees for an amount of Rs 3 lakh crore are issued. Loans under the scheme can be disbursed till 31 December. Around 85% of funds have been utilized.

 

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