New Delhi :The government is unlikely to extend the Rs 3 lakh crore-Emergency Credit Line Guarantee Scheme (ECLGS) for MSME sector beyond October even though the sanctioned amount so far is only nearly 65 percent of the target, sources said. The scheme is meant to provide financial support to businesses, primarily Micro, Small and Medium Enterprises (MSMEs), impacted by slowdown triggered by the coronavirus pandemic.
The sources said the objective is to provide support to all those affected and if there are no takers for the scheme, there is no need to extend the scheme even though there is some room left. On August 1, the government widened the scope of the Rs 3 lakh crore-scheme by doubling the upper ceiling of loans outstanding and including certain loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit.
To ensure more companies can benefit from the scheme, it was decided to increase the upper ceiling of loans outstanding as on February 29 for being eligible under the scheme from Rs 25 crore to Rs 50 crore. The maximum amount of Guaranteed Emergency Credit Line (GECL) funding under the scheme was correspondingly increased from Rs 5 crore to Rs 10 crore.
Announced as part of the government’s Rs 20.97 lakh crore-economic package in the wake of the coronavirus pandemic, the scheme was later tweaked to be made applicable for companies with an annual turnover of Rs 250 crore as against the earlier threshold of Rs 100 crore. Banks and Non-Banking Financial Companies (NBFCs) have approved loans worth about Rs 1,87,579 lakh crore while disbursement stood at Rs 1,36,140 crore as on October 5.
On May 20, the Cabinet approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 percent through ECLGS for MSME sector. Under the scheme, 100 percent guarantee coverage will be provided by the National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of GECL facility.
The scheme will 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 the amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier.