The Finance Ministry extends relief under the Rs 5-trillion Emergency Credit Line Guarantee Scheme (ECLGS) to civil aviation, hospitality, and related enterprises. ECLGS was initially introduced to assist MSMEs but later expanded to benefit larger firms in specific sectors and professionals affected by the pandemic.
The government has not only widened the scope of ECLGS, but it has also extended its validity by one year, i.e. up to March 2023. According to the new norms, civil aviation, hospitality, travel and tourism firms will now qualify to borrow up to 50% of their highest fund-based credit outstanding, versus 40% earlier. However, the borrowing capacity of a single MSME from the travel and tourism hospitality industry remains capped at Rs 200 crore. An aviation player’s borrowing limit has been increased to Rs 400 crore; it was Rs 200 crore earlier.
The validity extension of ECLGS and the expansion of its scope will benefit more businesses that haven’t been able to use the scheme yet. As of 25 March, loans sanctioned amount under ECLGS have surpassed the 3.19 trillion mark. About 95% of the guarantees issued concern loans related to micro, small and medium enterprises.
To reduce the cost of examining bank guarantees, letters of credit, non-fund-based credit, and other non-fund based facilities granted according to the latest version of the scheme (ECLGS 3.0) be issued without any cash margin. The commission or fee shall be capped at 0.5% p.a.
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Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.
