June 2, 2021 3:01:09 am
The government is open to increase the funding limit of Rs 3 lakh crore under the emergency credit line guarantee scheme (ECLGS), the scope of which was widened Sunday to include civil aviation sector and provide further relief to existing borrowers. Leading industry players have argued that the government should enhance the limit to Rs 4-6 lakh crore to ensure that benefits reach a large set of companies.
“Currently, there is a headroom of about Rs 45,000 crore under the scheme, which, we believe, should be sufficient to cater to new category of beneficiaries under the scheme. But, the government is open to increasing it if required, may be by another Rs 1 lakh crore. This will depend upon the how the scheme is exhausted, what kind of companies are availing it,” a senior Finance Ministry official said.
Under ECLGS, which is for helping companies tide over liquidity crunch resulting from Covid curbs, banks provide additional loans to existing borrowers without asking for extra collateral. To encourage banks, these loans are fully guaranteed by the government against credit losses. “We did a lot of number crunching and data tells us that the existing window is sufficient to accommodate possible stressed entities that could be looking for funding. But if more funds are required and more beneficiaries are added, the government can then enhance the funding limit,” the official said.
The government on Sunday expanded the scope of the ECLGS to provide more relief to small businesses. It brought the aviation sector under its ambit, and provided a concessional credit facility of up to Rs 2 crore in loans for health facilities to set up oxygen generation plants. Those who have availed loans under the scheme can get additional assistance of up to 10 per cent of outstanding dues as of February 29, 2020.
“While the ECLGS has been extended till September 2021 with disbursements being allowed till December 2021, it would have further helped if a higher allocation would have also been made under this scheme. We understand that of the Rs 3 lakh crore initially sanctioned, Rs 2.54 lakh crore has been disbursed leaving Rs 45,000 crore as the balance amount,” Ficci president Uday Shankar has said.
Ficci had requested that the quantum under ECLGS should be doubled to Rs 6 lakh crore. We hope the Finance Ministry will keep a close watch on the situation and appropriate enhancements will be made in time as required, he had said. CII also pointed out the need for an additional ECLGS, including increasing the size from Rs 3 lakh crore to Rs 4-5 lakh crore.
The government removed the current ceiling of Rs 500 crore of outstanding loans for eligibility under ECLGS, subject to maximum additional assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower.
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