Moneycontrol PRO
Upcoming Event:Attend Algo Convention Live, 2 Days & 12+ Speakers at best offer Rs.999/-, exclusive for Moneycontrol Pro subscribers. Register now!

Centre expands scope of ECLGS to Civil aviation, removes loan outstanding ceiling for a few sectors

The government also removed the loan outstanding ceiling of Rs 500 crore on sectors like hospitality, travel and tourism, leisure and sporting, and civil aviation, which means that even bigger entities with even higher outstanding loans in these sectors can avail of the ECLGS scheme.

May 30, 2021 / 04:18 PM IST
Representative Image

Representative Image

The Centre, on May 30, further expanded the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) by adding the Civil Aviation Sector and loans for oxygen generation plants under the scope of the scheme.

Additionally, as per an official statement, the government also removed the loan outstanding ceiling of Rs 500 crore on sectors like hospitality, travel and tourism, leisure and sporting, and civil aviation, which means that even bigger entities with even higher outstanding loans in these sectors can avail of the ECLGS scheme.

However, the maximum additional loans they can take under the scheme is limited to 40 percent of the outstanding loan or Rs 200 crore, whichever is lower.

“The inclusion of the Civil Aviation Sector under the Emergency Credit Line Guarantee Scheme is a welcome and timely move by the government that should help the sector that has been the most severely impacted by the COVID-19 pandemic,” said Ajay Singh, Chairman and Managing Director of Spicejet.

“World over, we have seen governments come to the rescue of their airlines multiple times over the last one year. Airlines in Indian have been at the very forefront of this war against COVID and the government’s recognition of the difficulties being faced by our industry is certainly a move in the right direction,” Singh said.


COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more

Relaxations to MSMEs

In a press release on May 30, the Finance Ministry said these steps were being taken to help businesses still reeling from COVID-19, especially in light of a devastating second wave.

“On account of the disruptions caused by the second wave of COVID 19 pandemic to businesses across various sectors of the economy, the government has further enlarged the scope of ECLGS,” the statement said.

Read: Explained | All you need know about the Emergency Credit Line Guarantee Scheme

“100 percent guarantee cover will be extended to loans of up to Rs 2 crore given to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants. The interest rate has been capped at 7.5 percent for the same,” the Ministry said.

"The scheme provides much needed support to boost and provide credit to the health care infrastructure in addition to the other relaxation’s provided and is definitely a step in the right direction to help other ailing sectors as well," said Karan Mitroo, Partner, L&L Partners.

When ECGLS started out as part of the ‘Aatmanirbhar Bharat’ set of announcements, it was primarily aimed at helping micro, small and medium enterprises. With later additions, the scope of the scheme was increased.

For the MSMEs, the loan tenure was increased to five years from four years, thus allowing them to repay interest only for the first 24 months with repayment of principal and interest in 36 months thereafter, compared to 12 months and 36 months respectively, earlier.

Further, the validity of ECLGS has been extended to September 30, 2021, or till guarantees for an amount of Rs 3 lakh crore are issued. Disbursement under the scheme has been permitted up to December 31, 2021.

The government also announced additional ECLGS assistance of up to 10 percent of the outstanding as on February 29, 2020 to MSME borrowers, in tandem with restructuring as per RBI guidelines of May 05, 2021. The earlier assistance under the RBI guidelines was 20 percent, which means the ECLGS assistance to MSMEs now stands at 30 percent of outstanding loans.

The ministry said that the latest modifications to ECLGS would enhance its utility and impact by providing additional support to MSMEs, safeguarding livelihoods and helping in seamless resumption of business activity. “These changes will further facilitate flow of institutional credit at reasonable terms.”

Follow Moneycontrol’s full coverage of the coronavirus pandemic here

Download your money calendar for 2022-23 here and keep your dates with your moneybox, investments, taxes

Arup Roychoudhury
first published: May 30, 2021 11:53 am
ISO 27001 - BSI Assurance Mark