Government extends ECLGS scheme for MSMEs till June 2021

Government of India has extended ECLGS scheme for MSMEs till June 2021 and the tenor of loans granted under ECLGS 3.0 would be 6 years including a moratorium period of 2 years.

The Government of India on Wednesday extended the Rs 3 lakh crore emergency credit line guarantee scheme by another three months till June 30 and has widened the scope of adding new sectors including hospitality, travel and tourism.

ECLGS 3.0 will involve extending credit of up to 40 per cent of total credit outstanding across all lending institutions as on February 29, 2020 as per the finance ministry.

The tenor of loans granted under ECLGS 3.0 will be six years including a moratorium period of 2 years.

The Ministry of Finance said, “In recognition of the continuing adverse impact of COVID-19 pandemic on certain service sectors, the government has now extended the scope of ECLGS through introduction of ECLGS 3.0 to cover business enterprises in Hospitality, Travel & Tourism, Leisure & Sporting sectors which had, as on February 29, 2020, total credit outstanding not exceeding Rs 500 crore and overdues, if any, were for 60 days or less, on that date.”

The validity of ECLGS 1.0, 2.0 and 3.0 have been extended upto June 30, 2021 or till guarantees for an amount of Rs 3 lakh crore are issued as per the ministry and the last date of disbursement under the scheme has been extended to September 30, 2021.

Initially the scheme was valid till October 20, 2020 and was extended till November 2020 but further extended till March 31, 2021 and had included 26 stressed sectors identified by the KV Kamath set-up by the RBI.

The statement by the Ministry of Finance said, “The modifications introduced in the scheme while providing an incentive to member lending institutions to enable availability of additional funding facility to the eligible beneficiaries will go a long way in contributing to economic revival, protecting jobs, and creating conducive environment for employment generation.”
The revised operational guidelines will be issued by National Credit Guarantee Trustee Company Ltd.