The modification of Emergency Credit Line Guarantee Scheme (ECLGS) by the Indian government will help micro, small and medium enterprises (MSMEs), including textile MSMEs, The Cotton Textiles Export Promotion Council (TEXPROCIL) has said. The government has extended ECLGS for eligible MSMEs including borrowed credit under ECLGS 1.0 to five years.
Borrowers who are eligible for restructuring as per RBI guidelines as of May 05, 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 increase in the period for repayment of loans to 5 years has come as a huge relief for the MSMEs who are struggling hard to get back to business from the disruptions caused by the second wave of COVID-19 pandemic,” TEXPROCIL chairman Manoj Patodia said in a press release.
An additional ECLGS assistance of up to 10 per cent of the outstanding as on February 29, 2020 to borrowers covered under ECLGS 1.0 has also been extended. “This is a very positive measure as it will lead to an increase in the much-needed cash flow for the MSMEs,” Patodia said.
The current ceiling of Rs. 500 crore of loan outstanding for eligibility under ECLGS 3.0 has also been removed, subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs. 200 crore, whichever is lower. Further, the validity of ECLGS extended to September 30, 2021 or till guarantees for an amount of Rs. 3 lakh crore are issued. Disbursement under the scheme is permitted up to December 31, 2021.
The removal of the ceiling for eligibility under ECGLS 3.0 and also the extension of the ECGLS will enable more units to take the benefits under the scheme, according to Patodia.
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