Sunday, January 23, 2022

11 million avail Rs 2.75 lakh crore under Credit Guarantee Scheme

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Over 11 million businesses and individuals have availed around Rs 2.75 lakh crore under the government’s credit guarantee scheme to provide working capital and emergency funds to help overcome the economic stress caused by the Covid-19 pandemic.

Banks have so far disbursed Rs 2.13 lakh crore under the Rs 4.5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), in which the government guarantees repayment, shows the latest available data.

Emergency Credit Line Guarantee Scheme (ECLGS)

To ease the stress due to the COVID-19 pandemic on several sectors across the country, the government has announced an Emergency Credit Line Guarantee Scheme.

The ECLGS aims to provide 100 per cent guaranteed coverage to Banks, Non-Banking Financial Institutions (NBFCs) and other lending institutions to provide emergency loans to business entities that are suffering due to the COVID-19 pandemic and are struggling to meet their working capital requirements.

Support to small businesses under ECLGS

The government is heavily supporting this scheme to prevent stress, especially among businesses that would have found it difficult to raise funds under the current circumstances, and provide some stimulus to the economy.

The industry said the initiative has helped companies avoid bankruptcy, but called for more direct support and demand-boosting measures to revive their businesses.

Limit of ECLGS increases to Rs 4.5 lakh crore

Last month, Finance Minister Nirmala Sitharaman announced a 50 per cent increase in the limit under ECLGS from Rs 3 lakh crore to Rs 4.5 lakh crore and include more sectors within its fold.

A finance ministry official said, “Banks have been asked to focus on new loans and not just on repayment of old loans.

85% guarantees give to micro-enterprises

As of February 28, more than 85% of these guarantees have been given to micro-enterprises – those with a turnover of less than Rs 5 crore and below Rs 1 crore investment in plant and industry.

Private sector banks have lent the maximum amount of Rs 1.08 lakh crore under the scheme, according to data till July 3, followed by public sector banks at Rs 90,315 crore and NBFCs at Rs 14,047 crore.

ECLGS extended to 30 sectors

The sectors that have used this scheme are diverse, from trade to services, even small manufacturing companies, which are mostly micro or small enterprises. Services and the contact-based sectors have been the most affected by the pandemic.

The scheme has now been extended to 30 sectors which will be valid till the guarantee for the whole corpus is issued. The last date for disbursement under the ECLG-Scheme has been extended till December 31, 2021.

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