Increased emergency secured credit limit; MSMEs and businesses up to 250 in turnover can benefit from the credit

The Center announced on Saturday the expansion of the Emergency Credit Lines Guarantee Program (ECLGS) by increasing the turnover limit for eligibility and the credit limit. Also, individuals and professionals taking loans for businesses will also benefit from this device.

“From now on, enterprises / MSMEs (micro, small and medium-sized enterprises) with turnover of up to 250 crore yen will be granted credit under the program,” Financial Services Secretary Debashish Panda said, while giving details in the presence of Minister of Finance Nirmala Sitharaman. There are also two changes. First, the maximum loan possible under the program has been doubled to 10 crores. Second, individual loans for business purposes have also been incorporated into the scheme.

The program provides a loan for which a 100 percent guarantee would be provided by the National Credit Guarantee Trustee Company (NCGTC) to member lending institutions (MLI). It will be extended in the form of an additional term loan facility for working capital in the case of commercial banks (BSC) and programmed financial institutions (FIs), and an additional term loan facility in the case of non-bank financial corporations (NBFC), to eligible MSMEs. , other business ventures and interested borrowers from Pradhan Mantri Mudra Yojana (PMMY).

Previously, it was said that the credit under the program would represent up to 20 percent of the total outstanding credit of the borrower up to 25 crore, as of February 29, 2020. Now this cap has been changed to 50 crore from ₹ which means loan up to 10 crore will be given. There is no change in other conditions such as the one-year moratorium period on the principal amount. Interest will however be payable during the moratorium period. The principal will be repaid in 36 installments after the end of the moratorium period.

Sitharaman expects the changes to expand the scope of the program so that an additional amount of over 1 lakh crore will be eligible under the program. However, the initial funding target of ₹ 3 lakh crore will not change. To date, various banks and NBFC have sanctioned over Rs 1.37 lakh crore, of which nearly 88,000 crore has been disbursed. The program, so far, has benefited nearly 40 lakh enterprises, including MSMEs. The program is available until October 31.

Speaking of other programs, announced with ECLGS, Panda informed that so far 1.12 crore of farmers have received a PM Kisan credit card, each with a credit limit of 90,000. As part of this initiative, the government intends to grant concessional credit in the amount of ₹ 2 lakh crore to farmers of 2.5 crore through the Kisan credit card.

As part of the subordinated debt program for distressed MSMEs / MSMEs, Panda said most bank boards have approved the outlines of the program. From now on, branches will be notified of the program on Monday. As part of this program, the government has set aside 20,000 crore of subordinated debt to help around two million MSMEs with stressed accounts or non-performing assets (NPAs). Here, the MSME promoters will receive debt, which will then be infused as equity into the unit. However, unlike credit guarantees, state support in this scheme is not total but partial.

He mentioned that the cash assistance program for non-bank finance companies (NBFCs) and housing finance companies has worked well. Commercial papers (CP) and non-convertible debentures (NCD) (even rated AA or below) in the amount of ₹ 18,000 crore. have been purchased and the process is underway to purchase additional such papers for an amount of 5,800 crore.