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Covid pandemic: Government has extended scope of emergency credit schemeThe Centre has enhanced the scope of the emergency credit line guarantee scheme (now termed ECLGS 4.0) owing to disruptions caused by the second wave of the Corona virus pandemic, where 100 per cent guarantee cover will be given for loans up to Rs two crores to hospitals and nursing homes for setting up oxygen plants. The interest rate has been capped at 7.5 per cent.According to the decision announced by the Finance Ministry, borrowers who are eligible for restructuring as per RBI’s May 5, 2021 guidelines, and who had availed loans under the initial ECLGS, for a period of four years, will now be able to avail loans for a tenure of five years.While earlier as per conditions of the four year loan period, repayment of interest could be done only during the first 12 months with repayment of principal and interest amount in 36 months thereafter, now under the conditions of the five year loan period, repayment of interest can be done for the first 24 months, while repayment of principal and interest can be done in 36 months period thereafter.The Government has also decided to remove the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0. This would be subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower;The validity of ECGLS has been extended up to September 30, 2021 or till guarantees for an amount of Rs three lakh are issued. Also disbursement under the scheme has been permitted up to December 31, 2021.The ECLGS was announced as part of the Atma Nirbhar Bharat Package (ANBP) by the Centre a year back, to provide fully guaranteed and collateral free additional credit to micro small and medium enterprises (MSMEs) and individual loans for business purposes to the extent of 20 per cent of their credit outstanding as on February 29,2020.The modifications in ECLGS would enhance the utility and impact of the scheme by providing additional support to MSMEs, safeguarding livelihoods and helping in seamless resumption of business activity. These changes will further facilitate flow of institutional credit at reasonable terms, a statement issued by the Finance Ministry said.



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