Credit and Finance for MSMEs: The loan guarantee under ECLGS is provided by NCGTC to lenders with respect to the credit given to borrowers on their loan outstanding as of February 29, 2020.
Credit and Finance for MSMEs: Around 95.21 per cent of total beneficiaries under the Rs 5-lakh-crore Emergency Credit Line Guarantee Scheme (ECLGS) have been micro, small and medium enterprises (MSMES), according to the government. Sharing data from the National Credit Guarantee Trustee Company Limited (NCGTC), which operates the scheme, Minister of State for Finance Bhagwat Karad said in a written reply to a question in Rajya Sabha on Tuesday that 117.87 lakh businesses have been supported as of March 11, 2022, with fully guaranteed collateral-free loans under ECLGS.
Existing credit borrowers such as MSMEs and other business enterprises constituted as proprietorships, partnerships, registered companies, trusts and limited liability partnerships (LLPs); and individual businesses are eligible to apply for guaranteed loans under ECLGS. The guarantee is provided by NCGTC to member lending institutions including banks and non-banking financial companies with respect to the credit given to borrowers on their loan outstanding as of February 29, 2020.
“The structure of scheme allows easy access to credit as the lenders offer pre-approved loans based on borrower’s existing credit outstanding and there is no fresh appraisal undertaken by lenders since additional credit is sanctioned over and above the credit facilities already assessed,” said Karad.
On February 10, Finance Minister Nirmala Sitharaman in her reply to a discussion on the budget 2022-23 in Lok Sabha said banks had sanctioned Rs 3.1 lakh crore loans while Rs 2.36 lakh crore loans were disbursed under ECLGS, as reported by PTI. In her budget speech, Sitharaman had announced the extension of the scheme till March 2023 from March 2022.
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Meanwhile, on Monday, the Parliamentary Standing Committee on Industry in its report had recommended the government to extend the loan repayment period under ECLGS up to seven-eight years from the current three-four years to support MSMEs impacted by the second Covid wave. The parliamentary panel also asked for at least a two-year moratorium period on the principal amount.
ECLGS was launched in May 2020 with an initial limit of Rs 3 lakh crore. The scheme was later expanded to cover the 26 sectors identified by the Kamath Committee and the healthcare sector as well under ECLGS 2.0 and hospitality, travel & tourism, leisure & sporting sectors under version 3.0. The latest 4.0 version was launched in May last year in response to the second wave of the pandemic to support hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants.