In a major relief to the MSMEs, PM Modi led government announced the extension of emergency credit scheme for the MSME sector till 31st March 2022. The scope of the Rs 4.5 Lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) has been widened with a purpose to support the Covid pandemic hit MSME sector. which is severely facing the liquidity issue.
The Ministry of Finance extended the ECLGS till 31 March 2022 or till guarantees for an amount of Rs 4.5 lakh crore are issued under the scheme, whichever is earlier. It also made other modifications to ensure that businesses adversely impacted by the second wave of Covid-19 get enhanced collateral free liquidity.
In an official statement released by the government, it said that Centre has been receiving demands from various industry bodies and other stakeholders to extend the scheme to ensure continued support to eligible sectors/businesses.
The Ministry of Finance also announced that the date of disbursement under the scheme has also been extended to 30 June, 2022.
The modifications in the scheme for MSMEs includes :
-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
-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.
– 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;
– 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
– 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 1.0,2.0 or 3.0
So far the emergency credit scheme provided relief to over 1.15 crore MSMEs and businesses. Till 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.
Supporting the government’s decision, the Apparel Export Promotion Council (AEPC) Chairman Dr A Sakthivel said “ A large section of the exporters, particularly the apparel exporters, are micro, small and medium enterprises (MSMEs) and they were badly impacted due to the pandemic. This scheme is helping many MSMEs to get back to business,”.
