Home / News / India /  Govt increases credit limit for civil aviation sector under ECLGS scheme

The finance ministry has expanded the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) to enhance the maximum loan under the scheme.

The loan limit under the scheme has been raised to 1,500 crore from 400 crore to help the Covid-hit sector tide over the liquidity stress.

The Department of Financial Services (DFS) has modified the ECLGS on Tuesday to enhance the maximum loan amount eligibility for airlines, an official statement issued on Wednesday said.

According to modified ECLGS 3.0, an airline would be eligible for "100 per cent of their fund based or non-fund-based loan outstanding as on the reference dates or 1,500 crore, whichever is lower; and of the above, 500 crore shall be considered, based on equity contribution by the owners."

All other terms and conditions prescribed under the operational guidelines of the ECLGS on August 30, 2022, would be applicable as it is, it said.

The modifications introduced are aimed to give necessary collateral-free liquidity at reasonable interest rates to tide over their present cash flow problems.

In March this year, the Emergency Credit Line Guarantee Scheme (ECLGS) was extended beyond March 2022, till March 2023, to implement the announcement made in the Union Budget 2022-23 by Finance Minister Nirmala Sitharaman.

In view of the high proportion of non-fund based credit in the overall credit of the civil aviation sector, the eligible borrowers were permitted to avail up to 50 per cent of their highest total fund and non-fund based credit outstanding, subject to a maximum of 400 crore per borrower, it said.

The ECLGS was announced in May 2020 in wake of the outbreak of Covid-19 to help various sectors, especially in the MSME segment, to get credit at a concessional rate of 7 per cent.

Post announcement, the scheme was modified several times depending on demand of various industries. Besides, the deadline of the scheme was extended several times to support various sectors of the economy that were hit hard due to the outbreak of the pandemic.

On August 17, the Union Cabinet approved the enhancement in the limit of ECLGS by 50,000 crore to 5 lakh crore. The additional amount is being earmarked exclusively for enterprises in hospitality and related sectors including the aviation sector.

Loans worth around 3.67 lakh crore have been sanctioned under ECLGS till August 5, 2022.

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