New Delhi -°C
Today in New Delhi, India

Sep 28, 2020-Monday
-°C

Humidity
-

Wind
-

Select Country
Select city
ADVERTISEMENT
Home / India News / Centre may extend deadline to avail Rs 3 lakh crore emergency credit facility

Centre may extend deadline to avail Rs 3 lakh crore emergency credit facility

The Union Cabinet on May 20, 2020 approved an Emergency Credit Line Guarantee Scheme (ECLGS) with a corpus of Rs 41,600 crore for about five months ending on October 31.The scheme provides for an easy additional working capital loan at a concessional rate of interest to an existing borrower who was not a defaulter.

india Updated: Aug 03, 2020 18:19 IST
Rajeev Jayaswal | Edited by Sohini Sarkar
Rajeev Jayaswal | Edited by Sohini Sarkar
Hindustan Times, New Delhi
The government has already extended its scope by enhancing eligibility criteria to include larger units and also allowed individual professionals such as doctors, chartered accountants and cab drivers.
The government has already extended its scope by enhancing eligibility criteria to include larger units and also allowed individual professionals such as doctors, chartered accountants and cab drivers.(ANI PHOTO.)

The Central government may extend the October 31 deadline to avail the Rs 3 lakh crore emergency working loan facility for small enterprises and individual professionals to help them tide over the crisis triggered by the Covid-19 pandemic, two officials said.

The government has already extended its scope by enhancing eligibility criteria to include larger units and also allowed individual professionals such as doctors, chartered accountants and cab drivers. The proposal to continue the scheme beyond October is also under consideration, the officials with direct knowledge of the matter said requesting anonymity.

The Union Cabinet on May 20, 2020 approved an Emergency Credit Line Guarantee Scheme (ECLGS) with a corpus of Rs 41,600 crore for about five months ending on October 31.The scheme provides for an easy additional working capital loan at a concessional rate of interest to an existing borrower who was not a defaulter.

Finance minister Nirmala Sitharaman on Saturday expanded its scope at the request of the industry in line with the revised definition of micro, small and medium enterprises (MSMEs) and the cap on funding under the scheme doubled from Rs 5 crore to Rs 10 crore. Besides, industrial units with turnover up to Rs 250 crore (earlier cap was Rs 100 crore), the finance minister extended the facility to individual professional. HT reported it on Sunday.

The National Credit Guarantee Trustee Company Ltd (NCGTC) that issued the operational guideline of ECLGS on June 2, said the interest rate under the scheme is capped at 9.25% per annum for banks and financial institutions. For non-banking finance companies (NBFCs), the interest rate should not exceed 14% per annum. NCGTC is a wholly-owned company of the Union government formed in March 2014 to act as a trustee for multiple credit guarantee funds.

Divakar Vijayasarathy, founder and managing partner at consultancy firm DVS Advisors LLP said, “With most of the states still under various stages of lockdown and vaccine expected by year end, it would definitely make sense for the government to extend the deadline. Once the demand picks up, there would be lot more takers for this scheme.”

In the last two months over Rs 1.36 lakh crore, less than 50% of Rs 3 lakh crore had been sanctioned by banks and NBFCs and only Rs 87,227 crore could be disbursed under the scheme. The government expects about Rs 1 lakh crore loan offtake by newly eligible individual professionals. Still there would be some headroom, which could prompt the government to extend the deadline, one of the officials quoted above said.

Kapil Rana, chartered accountant and founder of HostBooks Ltd, a cloud-based accounting platform said the deadline should be extended as the pandemic situation has not completely normalised and several people have not resumed their businesses. “Extension of the deadline will benefit the SME’s [small and medium enterprises] who have not yet availed the facilities,” he said.

“The intention of the government was to provide ease in cash flow, however, till now the sanction and disbursement are not up to the expected level,” he said.

Apparel Export Promotion Council (AEPC) chairman A Sakthivel proposed to remove the turnover criterion completely for exporters. “While turnover of exporters may seem large due to foreign exchange rate fluctuations, the thin margin on which the apparel exporters work and the perishable nature of their products make them vulnerable to any changes in export orders and delay in shipment, which is clearly evident during the ongoing crisis,” he said in a statement.

Sign In to continue reading