ECLGS extended to aviation, scope widened
The government on Sunday announced extending the Emergency Credit Line Guarantee Scheme (ECLGS) to the civil aviation sector that has been facing headwinds since the onset of the pandemic, besides expanding the scope of the scheme. It also extended the validity of the scheme till September
30, 2021 or till guarantees for an amount of Rs 3 lakh crore are issued. Disbursement under the scheme will be permitted up to December 31, 2021.
In a statement, the finance ministry said that on account of the disruptions caused by the second
Covid-19 wave to businesses across various sectors of the economy, it has been decided to enlarge the scope of ECLGS.
In March, ECLGS 3.0 was introduced to cover business enterprises in hospitality, travel and tourism, leisure and sporting sectors.
The ministry has also removed the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0, subject to maximum additional ECLGS assistance to each borrower being limited to
40 per cent or Rs 200 crore, whichever is lower.
As per an official statement by the finance ministry, under ECLGS 4.0, 100 percent guarantee cover will be extended to loans of up to Rs 2 crore given to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants. The interest rate has been capped at 7.5 per cent for the same, which means the banks can offer loans at lower rates than this ceiling.
"Borrowers who are eligible for restructuring as per the RBI guidelines of May 5, 2021, and had availed loans under ECLGS 1.0 of overall tenure of four years comprising of repayment of interest only during the first 12 months with repayment of principal and interest in 36 months thereafter will now be able to avail a tenure of five years for their ECLGS loan i.e. repayment of interest only for the first 24 months with repayment of principal and interest in 36 months thereafter," the ministry said.
Also, the new scheme has made a provision of additional ECLGS assistance of up to 10 per cent of the outstanding as of February 29, 2020, to borrowers covered under ECLGS 1.0, in tandem with restructuring as per the RBI guidelines of May 5, 2021.
The revised operational guidelines are being issued by the National Credit Guarantee Trustee Company Ltd (NCGTC).
Addressing a joint press conference, State Bank of India chairman Dinesh Khara, Indian Banks Association chairman Rajkiran Rai and IBA CEO
Sunil Mehta said the new measures and loan products announced by the banks were aimed at mitigating the impact from the resurgence of the Covid pandemic.
To implement the expanded ECLGS measures, the public scetor banks have put in place systems and processes for seamless implementation of RBI’s Resolution Framework 2.0, they said.
Declining to comment on the likely number of resolution applications by the MSMEs this time, Rai said last time out of the 8.5 lakh eligible firms only 60,000 had availed of the facility.
Recently the government had announced collateralfree automatic loans worth Rs 3 lakh crore for micro, small and medium enterprises, out of which Rs 2.54 lakh have been sanctioned, IBA and SBI officials said, adding there was still headroom to lend another Rs 46,000 crore under this scheme.
To a question, Rai said the Covid second wave has impacted the collections of public sector banks in the month of May. "It is difficult to give numbers but can say that we faced difficulty in collections in the month of May and we are offering the available reconstructing scheme to customers," Rai said.