ECLGS prolonged until subsequent fiscal, assure cowl raised to 5L cr

With a view to assist sectors reminiscent of hospitality and different shut contact sectors, which confronted repeated disruptions owing to restrictions put in place to regulate the unfold of Covid, Finance Minister Nirmala Sitharaman on Tuesday proposed to increase the Emergency Credit Line Guarantee Scheme (ECLGS) until the top of March 2023, with an expanded assure cowl of Rs 5 lakh crore.
“ECLGS has provided much-needed additional credit to more than 130 lakh MSMEs (micro, small and medium scale enterprises). This has helped them mitigate the adverse impact of the pandemic. Hospitality and related services, especially those by micro and small enterprises, are yet to regain their pre-pandemic level of business. Considering these aspects, the ECLGS will be extended up to March 2023,” Sitharaman stated in her Budget speech.

An further quantity of Rs 50,000 crore will likely be earmarked solely for the hospitality and associated enterprises, the finance minister stated. Apart from the ECLGS, the Credit Guarantee Trust for Micro and Small Enterprises scheme may even be revamped with required infusion of funds, Sitharaman stated, including that it could facilitate a further credit score of Rs 2 lakh crore for MSMEs, whereas additionally increasing employment alternatives.
“Raising and Accelerating MSME Performance (RAMP) programme with outlay of Rs 6,000 crore over 5 years will be rolled out. This will help the MSME sector become more resilient, competitive and efficient,” the finance minister stated.
Under the ECLGS, which is for serving to firms tide over liquidity crunch ensuing from Covid curbs, banks present further loans to present debtors with out asking for additional collateral. To encourage banks, these loans are totally assured by the federal government in opposition to credit score losses. This scheme will likely be key to make sure that MSMEs impacted by intermittent lockdowns in states get funding to remain afloat.

Sanctions and disbursements below the power are comparatively quick since lenders have the Central authorities’s assure in case of default in opposition to these loans. Companies from hospitality, journey & tourism, and leisure & sporting sectors are anticipated to profit from the comfort within the scheme. Hotels, eating places, canteens, caterers, marriage halls, tour operators, in addition to amusement parks and theatres can avail the power. Accounts which might be categorised as non-performing property or the place overdues have crossed 60 days (SMA-II) are usually not eligible.
In order to help Covid-hit MSMEs, the federal government final introduced an extension of its ECLGS until 31 March, 2022, or until ensures for an quantity of Rs 4.5 lakh crore are issued below the scheme, whichever is earlier.