The Indian government is unlikely to extend the amount of Emergency Credit Line Guarantee Scheme (ECLGS) for MSME sector which is of ₹3 lakh crore. The sanctioned amount is only 65 per cent of the target which will be implemented beyond October.
The outbreak of coronavirus encouraged Emergency Credit Line Guarantee Scheme (ECLGS) which is meant to provide financial support to Micro, Small and Medium Enterprises (MSME) for increasing their business.
The sources said “the objective is to provide support to all those affected and if there are no takers for the scheme, there is no need to extend the scheme even though there is some room left.”
On 1st August, 2020, the government has doubled the upper ceiling of loans including certain loans given to doctors, lawyers, charter accountants for business purposes.
Under this scheme, the upper ceiling of loans outstanding as on February 29 is increased from ₹ 25 crore to ₹ 50 crore which will benefit more companies. Except it, the maximum amount of Guaranteed Emergency Credit Line (GECL) funding was also increase from ₹ 5 crore to ₹ 10 crore.
In the wake of corona virus pandemic, the government announced the economic package of ₹ 20.97 lakh crore in which Emergency Credit Line Guarantee Scheme (ECLGS) was also included. It was later used for companies to have annual turnover of ₹ 250 crore which was more than the earlier threshold of ₹ 100 crore.
As on 5th October, banks and non-banking financial companies (NBFCs) have approved the loans of worth ₹ 1,87,579 lakh crore and the disbursement was ₹ 1,36,140 crore.
This scheme contains the provision of 100 per cent guarantee coverage which will be provided by the National Credit Guarantee Trustee Company (NCGTC) in the form of Guaranteed Emergency Credit Line (GECL) funding for those eligible Micro, Small and Medium Enterprises (MSMEs) and Micro Units Development and Refinance Agency (MUDRA) who are interested to have additional funding of up to ₹ 3 lakh crore. On May 20, the cabinet has given approval to this additional funding of up to ₹ 3 lakh crore at the concessional rate of 9.25 per cent.
This scheme will really work as booster for Micro, Small and Medium Enterprises (MSMEs) to increase their business. It will be applicable to all loans which are sanctioned under Guaranteed Emergency Credit Line (GECL) facility from the date of announcement to that date till the amount of ₹ 3 lakh crore is sanctioned. It will create a great turnover in the presence situation of MSMEs.