The new amendments are aimed at promoting business by supporting these contact intensive sectors through cash without any guarantee. The sanctioned amount under the scheme has been increased from Rs 4.5 lakh crore to Rs 5 lakh crore.
The increased limit will be subject to a maximum of Rs 200 crore per borrower.
Finance Ministry (Finance MinistryEmergency Credit Line Guarantee Scheme of Rs 5 lakh crore (ECLGS) has expanded. Under this, small enterprises related to travel, tourism and hotel-restaurant have been included in the scheme. The Finance Ministry said in a statement that under ECLGS 3.0, the scope of benefits has been expanded to include MSMEs (Micro, Small and Medium Enterprises) associated with travel, tourism and hotel-restaurant. Finance Minister (Finance Minister) Nirmala Sitharaman had announced in the budget of 2022-23 to extend the duration of the scheme for one year till March 2023. Also, the sanctioned amount under the scheme was increased from Rs 4.5 lakh crore to Rs 5 lakh crore.
As per the latest amendment, new borrowers of sectors covered under ECLGS 3.0 who had taken loan between March 31, 2021 to January 31, 2022 will now be eligible to avail the emergency credit facility. Along with this, the loan limit for eligible borrowers has been increased from 40 percent to 50 percent of the outstanding loan based on the fund.
What is ECLGS Scheme?
Under the ECLGS scheme, up to 100% guarantee coverage is provided to banks, non-banking financial institutions (NBFCs) and lending institutions. This coverage is given so that the banking institutions can issue emergency credit funds to the business companies.
For the work of companies battling Kovid-19 to continue, it is necessary to get help from banks. Stopping the work of companies means stopping production and its direct effect can be seen on the country’s economy and GDP. To avoid this, the ECLGS scheme has been announced, giving relief to the companies.
business promotion purpose
According to the statement, the increased limit will be subject to a maximum of Rs 200 crore per borrower. The ministry said the new amendments are aimed at promoting business by supporting these contact-intensive sectors through cash without any guarantee.
This loan can be taken by any business enterprises or MSME institutions. Proprietorship, Partnership, Limited Liability Partnership (LLP) companies can easily take term loans under ECLGS. The hospitality, travel, tourism and sporting sectors have also been included under ECLGS 3.0, expanding its scope. Companies whose outstanding credit is Rs 500 crore have also been included in this scheme.
how much interest will have to be paid
Loans are given under ECLGS at a very nominal rate. Unsecured loans can be availed at an interest rate of 14 per cent per annum on ECLGS loan. If a businessman takes a working capital term loan, then he can get a loan under ECLGS for 1 to 48 months. The loan tenure has been reduced to 5-6 years under ECLGS 2.0 and 3.0. There is also a moratorium on paying interest.
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