The Centre on Sunday expanded the scope of its emergency credit guarantee scheme to provide relief to small business borrowers. Under the ECLGS 4.0, it said, 100 per cent guarantee cover will be given to loans up to Rs 2 crore to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants. The interest rate on these loans has been capped at 7.5 per cent, which means the banks can offer loans less than this ceiling.
“On account of the disruptions caused by the second wave of COVID 19 pandemic to businesses across various sectors of the economy, the government has further enlarged the scope of Emergency Credit Line Guarantee Scheme,” it said.
Under the revamped scheme, eligible borrowers who had availed loans under ECLGS 1.0 will now be able to avail a tenure of five years for their ECLGS loan as against the earlier four year tenure, with repayment of interest only for the first 24 months and repayment of principal and interest in 36 months thereafter.
“Borrowers who are eligible for restructuring as per the RBI guidelines of May 5, 2021, and had availed loans under ECLGS 1.0 of overall tenure of four years comprising of repayment of interest only during the first 12 months with repayment of principal and interest in 36 months thereafter will now be able to avail a tenure of five years for their ECLGS loan i.e. repayment of interest only for the first 24 months with repayment of principal and interest in 36 months thereafter,” the ministry said.
The government has also removed the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0, subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower. Loans to the civil aviation sector made eligible under ECLGS 3.0.
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The ECLGS 3.0 covered business enterprises in Hospitality, Travel & Tourism, Leisure & Sporting sectors, which had as of February 29, 2020, total credit outstanding not exceeding Rs 500 crore and overdue, if any, was for 60 days or less, on that date. The tenor of loans granted under ECLGS 3.0 would be 6 years, including a moratorium period of 2 years. The revised operational guidelines are being issued by National Credit Guarantee Trustee Company Ltd.
(with agency inputs)
