The government on Sunday (May 30) decided to tweak its emergency credit guarantee scheme to provide longer term relief to a wider section of small business borrowers.
Under ‘ECLGS 4.0’, 100% guarantee cover will be extended to loans of up to Rs 2 crore given to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants. The interest rate has been capped at 7.5% for the same.
“Borrowers who are eligible for restructuring as per RBI guidelines of May 05, 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, will now be able to avail a tenure of five years for their ECLGS loan i.e. repayment of interest only for the first 24 months with repayment of principal and interest in 36 months thereafter,” the ministry said.
Under the revamped scheme, eligible borrowers who had availed loans under ECLGS 1.0 will now be able to avail a tenure of five years for their ECLGS loan as against the earlier four year tenure, with repayment of interest only for the first 24 months and repayment of principal and interest in 36 months thereafter.
“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,” the ministry noted in its statement adding that these changes will further facilitate flow of institutional credit at reasonable terms.
While the Civil Aviation sector will now be eligible under ECLGS 3.0, the government has removed the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0.
Ajay Singh, CMD, SpiceJet, said: “Inclusion of the Civil Aviation Sector under the ECLGS is a welcome & timely move by the govt. Airlines have been at the very forefront of this war against Covid and the government’s recognition is certainly a move in the right direction.”
The government has also extended validity of ECLGS till September 2021 or till guarantees for an amount of Rs 3 lakh crore are issued and disbursement under the scheme permitted up to end December.
In March, this year the government had extended the scope of ECLGS through introduction of ECLGS 3.0 to cover business enterprises in Hospitality, Travel & Tourism, Leisure & Sporting sectors.
