On Monday this week, the Government of India has announced the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs by one month till November 30, as the scheme has so far failed to meet the target of Rs 3 lakh Crores.
The Ministry of Finance has said in a statement that the emergency credit line guarantee scheme has been extended till November 30, 2020, or until the entire amount of Rs.3 lakh Crores gets sanctioned, whichever is earlier, to such businesses under the scheme.
“This extension will provide a further opportunity to such borrowers who have not availed of the scheme so far, to obtain credit under the scheme,” said the Finance Ministry.
The scheme was launched as part of the Aatmanirbhar Bharat Abhiyan package announced by finance minister Nirmala Sitharaman in May to mitigate the distress caused by coronavirus-induced lockdown, to provide fully guaranteed and collateral-free additional credit to MSMEs, business enterprises, individual loans for business purposes, and MUDRA borrowers are provided to the extent of 20 per cent of their credit outstanding as on February 29, 2020.
Borrowers with credit outstanding up to Rs.50 Crores as on February 29, and with an annual turnover of up to Rs.250 Crores are eligible under the scheme.
The Interest rates under the scheme are capped at 9.25 per cent for banks and financial institutions (FIs), and 14 per cent for non-banking financial companies (NBFCs).
The tenor of loans provided under the Scheme is four years, including a moratorium of one year on principal repayment.
According to a statement issued, Rs.2.03 lakh Crores has been sanctioned so far to 60.67 lakh borrowers while actual disbursals are just Rs.1.48 lakh crore, six months after the scheme was launched.
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