NEW DELHI: Finance minister Nirmala Sitharaman on Saturday allowed loans for larger MSMEs and professionals for business purposes within the ambit of Emergency Credit Line Guarantee Scheme (ECLGS).
Heeding to industry demand and in sync with the new definition of medium and small, and micro enterprises (MSMEs), the finance ministry has increased the annual turnover ceiling of companies that could avail loans under the scheme to ₹250 crore from ₹100 crore at present. The maximum amount of loans that can be availed under the scheme has also been increased to ₹10 crore from ₹5 crore.
Individuals can avail themselves of ECLGS if they already had loans for business purposes and subject to condition that they fulfill eligibility criteria.
Sitharaman said the expansion of the scheme to include individual loans for working capital purposes and larger MSMEs is likely to boost credit offtake by ₹1 trillion within the overall ceiling of ₹3 trillion for the scheme. As of 29 July, ₹1.4 trillion had been sanctioned under the scheme while ₹87,227 crore worth of loans disbursed.
ECLGS was announced as a part of the government’s ₹20 trillion financial package to help the poor and small businesses tide over the crises that followed the coronavirus pandemic and the ensuing lockdown. This collateral-free loan is expected to enable small businesses to pay salaries, rent and to help with restocking expenses.
The scheme provides incentives to banks and non-bank lenders to offer additional funding facility to small borrowers by providing them 100% guarantee for any losses suffered by the lenders due to any default. The larger idea is to support small businesses struggling to meet their operational liabilities due to the imposition of a nationwide lockdown.