Govt extends emergency credit line for sectors stressed by Covid

Sarkaritel
By Sarkaritel November 12, 2020 17:26

Govt extends emergency credit line for sectors stressed by Covid


New Delhi, Nov 12  The Centre on Thursday revamped its Rs three lakh crore emergency credit line guarantee scheme (RCLGS) launched for providing liquidity to the MSMEs during the Covid pandemic by extending its coverage to entities in 26 stressed sectors identified by Kamath Committee in its report recently with the addition of the health care sector.

Accordingly, the ECLGS has been extended till March 31, 2021 from its earlier sunset time of November 30.

Announcing the Atmanirbhar Bharat Abhiyan 3.0 stimulus package, Finance Minister Nirmala Sitharaman said under ECLGS already Rs two lakh crore had been provided to the MSME sector and the balance Rs one lakh crore will be now be used to support stressed sectors to revive businesses affected by the pandemic.

The Kamath Committee formed by the RBI to make recommendations on the financial parameters to be considered for the one-time restructuring of loans impacted by the Covid-19 pandemic in its report in September identified 26 sectors, including hospitality and tourism, aviation, construction, textile, auto components, mining for the purpose of recommending financial parameters to be factored in the resolution plan.

Sitharaman said that these sectors could also now get 100 per cent guaranteed collateral free additional credit at capped interest rates as is available to other MSMEs provided credit outstanding is above Rs 50 crore and up to Rs 500 crore as on February 29, 2020.

The ECLGS scheme in its first version was limited to MSME units, business enterprises, individual loans for business purposes and MUDRA borrowers. It extended additional credit up to 20 per cent of outstanding loans as on February 29 for entities with outstanding credit up to Rs 50 crore as on February 29 and annual turnover up to Rs 250 crore.

Tenor of additional credit under ECLGS 2.0 will now be five years, (instead of four years earlier), including a one year moratorium on principal repayment.

“ECLGS 2.0 to provide much needed relief to stressed sectors by helping entities sustain employment and meet liabilities. It will also benefit the MSME sector which provides goods and services to eligible entities,” a government statement on the scheme said.

Sarkaritel
By Sarkaritel November 12, 2020 17:26