According to the report, the government would not extend the ₹ 3 lakh crore-Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector beyond October although the sanctioned amount so far is only 65 percent of the target.
The scheme would provide financial support to businesses of mainly Micro, Small, and Medium Enterprises (MSMEs) that were affected by the coronavirus pandemic led lockdown.
According to a report from Moneycontrol, they have been informed by sources that the objective of the scheme is to support all those who have been affected by the coronavirus pandemic led lockdown. The sources had also said that if there are no takers for the government provided scheme, there is no need to extend the deadline although there is some room left to accommodate more companies. The government had extended the scheme and said that they would provide ₹ 3 lakh crore by doubling the upper ceiling of loans outstanding and including certain loans given to professionals like doctors, lawyers, and chartered accountants for business purposes under its ambit.
The government had decided to raise the upper ceiling of loans outstanding as on the 29th of February for being eligible under the scheme from ₹ 25 crores to Rs 50 crore so that more people can be benefitted from the scheme. The maximum amount for the Guaranteed Emergency Credit Line (GECL) funding under the scheme was also raised from ₹ 5 crore to ₹ 10 crores.
The scheme was announced as a part of the government’s ₹ 20.97 lakh crore-economic package to provide relief from the coronavirus pandemic led economic slowdown. Later, the scheme was converted to so that it is also applicable for companies with an annual turnover of ₹ 250 crores as against the earlier threshold of ₹ 100 crores. It was estimated that banks and other Non-Banking Financial Companies (NBFCs) have approved loans worth about ₹ 1,87,579 lakh crore as of October 5. The estimated disbursement stood at ₹ 1,36,140 crore.
The report from Moneycontrol also informed that the cabinet also approved additional funding of up to Rs 3 lakh crore on May 20. The funding was approved at a concessional rate of 9.25 percent through ECLGS for the MSME sector. Under this scheme, 100 percent guarantee coverage will be provided by the National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of GECL facility.
All loans that are sanctioned under the GECL facility starting from the date of announcement of the scheme till October 31st have the liberty to apply this scheme. It can also be applied till the amount of ₹ 3 lakh crore is sanctioned under GECL, whichever happens, earlier.