Bearing in mind the projected increase in demand during the upcoming festive season and the opening of the various economies the centre as part of the Atma Nirbhar Bharat Package provided an extension of the Emergency Credit Line Guarantee Scheme (ECGLS) for another month till 30, November 2020.
This allowance would offer a further incentive for those borrowers who have not yet benefited from the scheme an official release said.
The extension has been announced to offer full secured and collateral-free additional loans to MSMEs, business companies, individual business loans and MUDRA creditors, up to 20% of their outstanding loans as of 29, February 2020.
Borrowers as on 29, February 2020 with an unpaid, credit of up to 50 crores with an annual turnover up to Rs. 250 crore are liable to be benefitted from the scheme.
The interest rate under the scheme is capped at 9.25 per cent for banks and FIIs and 14 per cent for NBFCs. The term of the loans issued under the programme is four years, with a one-year suspension on principal repayment.
According to the data submitted to the ECLGS site by a Member Lending Institution, the sum of 2.03 lakh crore has been approved till date and extended to 60.67 lakh borrowers, while an amount of 1.48 lakh crore has been disbursed the release added.
The approval was granted after the Finance Industry Development Council, a legislative body of NBFCs, penned a request letter to Finance Minister Nirmala Sitharaman demanding an extension of the scheme by two months until 31 December.
The scheme was valid until October, however as the sum of the corpus
disbursed, was lower despite the extension of the plan and the ambitious drive by the Ministry of Finance.
“The scheme has been extended until 30 November or until the balance of Rs 3 lakh crore is approved under this scheme whichever is earlier”, the Ministry of Finance said in a statement.
On 1 August, the Government extended the scope of the Rs 3 Lakh Crore-ECLGS scheme by doubling the upper limit of unpaid loans, including some loans provided to practitioners such as physicians, lawyers and chartered accountants for business purposes. The Rs 30,000-crore special liquidity scheme was closed as per the due date but less than a quarter of the funds were disbursed to stressed NBFCs.