Govt expands scope of emergency credit plan
The government has decided to extend the validity of the scheme till September 30
NEW DELHI: To help small businesses tide over the prevailing economic crisis generated by the growth in cases of Covid-19 infections, the Ministry of Finance on Sunday decided to enlarge the scope of the Emergency Credit Line Guarantee Scheme (ECLGS). Business owners, especially the ones with limited capacity, have been urging the government to extend the scheme as the state wise lockdowns has adversely impacted their businesses and limited their ability to repay loans taken from banks.
The union government has decided to extend the validity of the scheme till September 30, 2021 or till guarantees for an amount of ₹3 lakh crore are issued. Disbursement under the scheme will be permitted up to December 31, 2021.
According to a statement issued by the Ministry of Finance borrowers who are eligible for restructuring as per Reserve Bank of India (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.
Additional ECLGS assistance of up to 10% of the outstanding as on February 29, 2020 to borrowers covered under ECLGS 1.0, in tandem with restructuring as per RBI guidelines of May 05, 2021, the statement noted. The Ministry also informed that ₹500 crore of loan outstanding for eligibility under ECLGS 3.0 to be removed, subject to maximum additional ECLGS assistance to each borrower being limited to 40% or ₹200 crore, whichever is lower.
Companies in the civil aviation sector which has been one of the most adversely impacted due to the resurgence in Covid-19 cases, will also be able to get credit from the banks under the scheme. The government will also give 100% guarantee cover to loans up to ₹2 crore to hospitals, nursing homes, clinics and medical colleges for setting up on-site oxygen generation plants and interest for such loans cannot exceed 7.5%.
“The modifications in ECLGS,would enhance the utility and impact of ECLGS 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,” the finance ministry said in a statement.
Meanwjile, the Goods and Services Tax (GST) Council led by Finance Minister Nirmala Sitharaman on Friday decided to exempt IGST on import of free Covid-related supplies till August 31. Sitharaman said that the council decided to put Amphotericin B, a key medicine for the treatment of black fungus, in the list of items exempted from IGST.
The GST Council met after a gap of seven months. Sitharaman said that the council was unable to meet in between due to the budget session and assembly elections in five states. She said that several decisions were taken during Friday’s meeting.
This was the first meeting of the GST Council in the financial year 2021-22. The council’s last meeting was held in October last year.
The finance minister further said that like last year, the GST Council felt that this is not the appropriate time for a correction in Inversion duty, so this remains where it is.