The government has extended the emergency credit line guarantee scheme (ECLGS) till March 2023. The Finance Minister Nirmala Sitharaman, in her Budget 2022-23 speech, said the cover will expand by Rs 50,000 crore to Rs 5 lakh crore.
She said an additional amount has been earmarked exclusively for hospitality, related sectors and government will take steps to make the MSME sector more resilient. The scheme provides 100% guarantee coverage for additional working capital term loans up to 20% of the outstanding credit.
The government in September 2021 had extended the scheme to March 2022. It had increased the guarantee limit in June 2021 from Rs 3 lakh crore to Rs 4.5 lakh crore. Keeping in mind the COVID-19 pandemic, the government had launched the scheme to provide credit facilities to business enterprises, small and medium businesses. It should be noted that only those MSME borrowers with outstanding loans of up to Rs 50 crores as of February 29, 2020, and turnover of up to Rs 250 crore for FY201920 were eligible.
Loans amounting to Rs 2.28 lakh crore, as of November 12, 2021, were disbursed under the ECLGS to MSMEs and other businesses by banks out of Rs 2.82 lakh crore loans sanctioned. 66% of the ECLGS guarantees were issued to MSMES wherein 1.02 crore micro units received guarantees worth Rs 65,771 crore followed by 4.98 lakh small enterprises that were given Rs 66,345 crore worth guarantee. However, only 2.60 lakh medium enterprises were able to get guarantees worth Rs 42,041 crore.
The extension is welcomed as it will surely help revive the hospitality and travel-related services sector as it was worst-hit by the pandemic. It will give the necessary stimulus for businesses to not shutdown during difficult times.