The Emergency Credit Line Guarantee Scheme (ECLGS) that helped micro, small and medium enterprises get access to additional credit during the outbreak of the COVID-19 pandemic has been extended till March 2023 and its guarantee cover expanded by Rs 50,000 crore to Rs 5 lakh crore, the government said in a press release today.
Finance Minister Nirmala Sitharaman while presenting the Union Budget for 2022-23 had announced the extension of the ECLGS till March 2023 and had also said that the additional amount will be exclusively earmarked for the hospitality and related segments to help them recover from the aftermath of the COVID-19 pandemic.
As part of the new operational guidelines for ECLGS 3.0, new borrowers from the hospitality, travel, tourism, and civil aviation sectors who have borrowed after March 31, 2021, and up to January 31, 2022, will also now be eligible to avail of emergency credit facilities under ECLGS 3.0.
The National Credit Guarantee Trustee Co has also increased the limit for borrowing under the third iteration of the ECLGS.
The government has set January 31, 2022, as the reference date for companies to avail of credit as part of the extended ECLGS scheme.
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Companies in the hospitality, travel and tourism industry can now borrow up to 50 percent of their highest fund-based credit outstanding, as against 40 percent of their credit outstanding as part of ECLGS 1.0 and ECLGS 2.0, the government said in the statement.
However, the cap on maximum borrowing by a single MSME from the hospitality, travel and tourism industry still stands at Rs 200 crore.
Similarly, companies in the civil aviation industry can now borrow up to 50 percent of their highest fund-based credit outstanding, as against 40 percent of their credit outstanding as part of earlier iterations of the ECLGS scheme.
The cap on maximum borrowing by a single MSME from the aviation industry has been increased to Rs 400 crore from Rs 200 crore earlier.
Under the ECLGS, banks provide additional loans to existing borrowers without asking for extra collateral to help them cope with the liquidity crunch resulting from COVID curbs. These loans are also fully guaranteed by the government against credit losses.As on March 25, 2022, loans sanctioned under ECLGS have crossed Rs 3.19 lakh crore, and about 95 percent of the guarantees issued are for loans sanctioned to micro, small and medium enterprises.