Rs 3 lakh crore loan guarantee scheme expanded to help businesses recover from second Covid shock

Modi government has expanded its loan guarantee programme to help businesses ward off the ravages of the second wave.

According to the proposal, the Central government will be permitting small businesses to borrow an extra 30 per cent of their credit limit. This is a sizeable bump-up from the 20 per cent announced last year.

The expansion of the Emergency Credit Line Guarantee Scheme is part of a series of planned steps aimed at boosting assistance to the economy to help it recover from the impact of the second Covid wave.

Under the plan, last year’s Rs 3 lakh crore ($41 billion) of loans to small businesses will now be expanded further.

“Validity of ECLGS extended to 30.09.2021 or till guarantees for an amount of Rs.3 lakh crore are issued. Disbursement under the scheme permitted up to31.12.2021,” an official notification said.

Other measures include:

— ECLGS 4.0:100% guarantee cover to loans up to Rs.2 crore to hospitals/nursing homes/clinics/medical colleges for setting up on-site oxygen generation plants, interest rate capped at 7.5%;

— 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;

Read More   Canada, U.S. making 'lots of progress' as NAFTA talks near deadline

— Additional ECLGS assistance of up to 10% of the outstanding as on February 29, 2020 to borrowers covered under ECLGS 1.0, in tandem with restructuring as per RBI guidelines of May 05, 2021;

— Current ceiling of Rs. 500 Cr. of loan outstanding for eligibility under ECLGS 3.0 to be removed, subject to maximum additional ECLGS assistance to each borrower being limited to 40% or Rs.200 crore, whichever is lower;

— Civil Aviation sector to be eligible under ECLGS 3.0.


Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.