On Sunday , the back-to-back announcements from the Finance Ministry and the Indian Banks Association (IBA), the industry lobby of banks, raised hopes of some major announcements to give relief for Covid-hit segments of the economy . But, the outcome of both announcements was largely some tweaking of the existing schemes and explanation of the annoncements already made by the Reserve Bank of India (RBI) with respect to the Emergency Credit Line Guarantee Scheme (ECLGS).
If one avoid the technicalities, the major thrust of the announcements made are the following:
The scope of the ECLGS scheme was expanded to let borrowers draw additional support of 10 per cent above the 20 per cent of the total loan outstanding already announced as on February, 2020. Also, the scheme validity has been extended to September 30, 2021. Under ECLGS 3.0, the current ceiling of Rs500 crore loan outstanding has been removed subject to maximum facility of 40 per cent of existing exposure, or Rs200 crore, whichever is lower.
Civil aviation sector has been included under ECLGS--a good news for stressed airlines and related businesses. One needs to see along with the May 5 announcement of the RBI which said those who had not availed the re-structuring 1.0 can now avail of the restructuring 2.0 if the loan amount is up to Rs 25 crore, besides some liquidity help to ramp up Covid infrastructure.