India approves additional funding of up to ₹3 bn via ECLGS

21 May '20

2 min read

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The Indian cabinet recently approved additional funding of up to ₹3 billion to eligible micro, small and medium enterprises (MSMEs) and interested borrowers of MUDRA loan by way of ‘Emergency Credit Line Guarantee Scheme’ (ECLGS). The scheme has been formulated as a specific response to the unprecedented situation caused by COVID-19 and the lockdown.

Under the scheme, cent per cent guarantee coverage will be provided by the National Credit Guarantee Trustee Company Limited (NCGTC) in the form of a Guaranteed Emergency Credit Line (GECL) facility and a corpus of ₹41,600 crore will be provided by the government spread over the current and the next three fiscals.

The scheme would be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31, or till an amount of ₹3 billion is sanctioned under the GECL, whichever is earlier, said an official release.

The primary objective of the scheme is to provide an incentive to member lending institutions, i.e., banks, financial institutions (FIs) and non-banking financial companies (NBFCs), to increase access to and enable availability of additional funding facility to MSME borrowers in view of the economic distress caused by the crisis.

Finance minister Nirmala Sitharaman had recently announced a collateral free automatic loan up to ₹3 crore for MSMEs with a turnover up to ₹100 crore. She had also announced five other measures for MSMEs, as part of the fiscal stimulus package of ₹20 lakh crore under Atmanirbhar Bharat (self-reliant India) scheme.

Fibre2Fashion News Desk (DS)

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