Credit guarantee programme of Rs 3 lakh crore has been expanded
According to the idea, the Central Government may consider allowing small enterprises to borrow an additional 30% of their credit limit. This is a significant increase above the 20% reported last year.
The Modi administration has increased its loan guarantee scheme to assist companies in mitigating the effects of the second wave of Covid.
According to the idea, the Central Government will allow small firms to borrow an additional 30% of their credit limit. This is a significant increase above the 20% reported last year. This calls for a Credit guarantee programme for the customers.
The extension of the Emergency Credit Line Guarantee Scheme is one of a series of planned initiatives aimed at increasing economic support to help the economy recover from the effects of the second Covid wave. A credit guarantee programme would allow people to discharge health and other medical expenses.
According to the proposal, last year’s Rs 3 lakh crore ($41 billion) in small company loans will be increased.
“The extension till September 30, 2021, has been given until guarantees in the amount of Rs.3 lakh crore are given in ECLGS. Disbursement under the programme is authorised until December 31, 2021, “According to an official announcement in regards to the Credit guarantee programme.
- Other steps include: — ECLGS 4.0:100% guarantee cover for loans of up to Rs.2 crore to hospitals/nursing homes/clinics/medical institutes to establish on-site oxygen production units and an interest rate cap of 7.5%.
- Borrowers who are eligible for restructuring under RBI guidelines issued on May 5, 2021, and who took out loans under ECLGS 1.0 with an overall tenure of four years consisting of repayment of interest only for the first 12 months and repayment of principal and interest in 36 months after that will now be able to take out loans with a five-year tenure, i.e. compensation of interest only for the first twenty-four months and repayment of principal and interest in 36 months after that.
- Additional ECLGS assistance of up to 10% of outstanding as of February 29, 2020, to debtors covered by ECLGS 1.0, in conjunction with restructuring in accordance with RBI rules effective May 5, 2021;
- The current loan outstanding ceiling of Rs. 500 crore for eligibility under ECLGS 3.0 would be eliminated, subject to a maximum extra ECLGS assistance to each borrower of 40% or Rs.200 crore, whichever is greater.
- Under ECLGS 3.0, the civil aviation industry will be eligible.