Union Finance Minister, Nirmala Sitharaman has extended the Emergency Credit Line Guarantee Scheme for micro, medium and small enterprises till March 2023. This is expected to help MSMEs battle stress emanating due to Covid-19 pandemic.
The pandemic induced lockdown took a heavy toll on small business across the country and industries. The government came up with ECLGS to help MSMEs get access to finance and so far over 95 lakh MSMEs have availed the ECLGS scheme.
Under ECLGS, up to 20 percent of the borrower’s total outstanding credit up to Rs 25 crore was guaranteed. Interest rate was capped at 9.25 percent for banks and 14 percent for NBFCs. Further, 100 percent guarantee for additional funding up to Rs 4.5 lakh crore was sanctioned for MSMEs who were specifically hit due to the pandemic.
According to the Economic Survey released before budget, up till November 19, 2021, Rs 2.28 lakh crore had been disbursed to 95.2 lakh borrowers, impacting 5.45 crore employees. Further, 64 percent of the guarantee amount was disbursed to MSMEs and then the scheme had been extended till March 31, 2022.
