Individual loans given for business purposes will now also come under the ambit of the Emergency Credit Line Guarantee Scheme that the government had launched to provide credit support to small and medium enterprises.
Moreover, the upper ceiling of outstanding loans under the scheme has been increased from Rs 25 crore to Rs 50 crore and the turnover ceiling has been hiked to Rs 100 crore to Rs 250 crore.
On May 21, the Cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 percent through Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector.
Individuals can avail themselves of ECLGS if they already had loans for business purposes and subject to the condition that they fulfill eligibility criteria.
Sitharaman said the expansion of the scheme to include individual loans for working capital purposes and larger MSMEs is likely to boost credit offtake by ₹1 trillion within the overall ceiling of ₹3 trillion for the scheme. As of 29 July, ₹1.4 trillion had been sanctioned under the scheme while ₹87,227 crores worth of loans disbursed.
“We have also decided to cover individual loans given to doctors, chartered accountants for business purposes under the scheme,” Financial Services Secretary Debasish Panda said. Similar procedure as with regard to companies would be adopted to sanction loans to these professionals running their business, he said.
ECLGS or Emergency Credit Line Guarantee Scheme was announced as a part of the government’s ₹20 trillion financial packages to help the poor and small businesses tide over the crises that followed the coronavirus pandemic and the ensuing lockdown. This collateral-free loan is expected to enable small businesses to pay salaries, rent, and to help with restocking expenses.
The scheme provides incentives to banks and non-bank lenders to offer additional funding facilities to small borrowers by providing them a 100% guarantee for any losses suffered by the lenders due to any default. The larger idea is to support small businesses struggling to meet their operational liabilities due to the imposition of a nationwide lockdown.
The overall ceiling for the scheme remains at Rs 3 lakh crore and the validity of the scheme is till October. The finance minister said that the intended changes are likely to expand the ambit of ECLGS to make an additional amount of more than Rs 1 lakh crore eligible under the scheme. On May 20, the Cabinet approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 percent through ECLGS for the MSME sector.
