Eligible MSME borrowers will get an offer from their lending institutions for a pre-approved loan under the Rs 3 lakh crore scheme announced for micro, small and medium enterprises to help them deal with the impact of COVID-19.
The Guaranteed Emergency Credit Line (GECL) of Rs 3 lakh crore was announced as part of Rs 21 lakh crore package by the government.
As per a set of FAQs, GECL is a loan for which 100 percent guarantee would be provided by National Credit Guarantee Trustee Company to Member Lending Institutions (MLIs) -- banks, financial institutions and NBFCs.
The FAQs were issued by National Credit Guarantee Trustee Company (NCGTC).
The loan will be extended in the form of additional working capital term loan facility in case of banks and additional term loan facility in case of NBFCs to eligible MSMEs/ business enterprises and interested Pradhan Mantri Mudra Yojana (PMMY) borrowers.
Frequently Asked Questions
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.
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.
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.
The Frequently Asked Questions (FAQs) said the scheme is a specific response to the unprecedented situation created by COVID-19.
It seeks to provide much-needed relief to the MSME sector by incentivising lending institutions to provide additional credit of up to Rs 3 lakh crore at low cost, thereby enabling MSMEs to meet their operational liabilities and restart their businesses.
"This is a pre-approved loan. An offer will go out from the MLI to the eligible borrowers for a pre-approved loan which the borrower may choose to accept. If the MSME accepts the offer, it will be required to complete requisite documentation," it said.
An 'opt-out' option will be provided to eligible borrowers and if a borrower is not interested in availing the loan, he/she may indicate accordingly.
Interest rates under the scheme have been capped at 9.25 per cent for banks and financial institutions, and at 14 per cent for NBFCs. The tenor of loans provided under GECL will be four years and there will be no pre-payment penalty.
Also, a moratorium period of one year on the principal amount will be provided for GECL funding.
Interest shall, however, be payable during the moratorium period, the FAQs said. The principal will have to be repaid in 36 installments after the moratorium period is over.
All MSME borrower accounts with combined outstanding loans across all lending institutions of up to Rs 25 crore as on February 29, 2020, and an annual turnover of up to Rs 100 crore in 2019-20 are eligible to avail the benefit under the scheme.
The scheme also covers loans under PMMY extended on or before February 29, 2020, and reported on the MUDRA portal.
Meanwhile, traders body CAIT has demanded that the scope of the scheme be widened to include all traders and not only those who are existing borrowers.
It said the COVID-19 lockdown has seriously hurt the retail businessmen and traders.
"Over the past 60 days, the losses recorded and estimated have been over Rs 9 lakh crore," said the Confederation of All India Traders (CAIT) in a release.
CAIT estimates that before the pandemic struck, retail businesses had a daily turnover of over Rs 15,000 crore. It expressed apprehensions that as losses are going to mount and revival becoming difficult, "about 20 per cent of Indian traders are likely to shut shop permanently".Follow our full coverage of the coronavirus pandemic here.