Credit and Finance for MSMEs: The Modi government’s flagship credit scheme for Covid-hit MSMEs and others Emergency Credit Line Guarantee Scheme (ECLGS) has been given its fifth extension since its launch last year. The Finance Ministry on Wednesday extended the scheme by six more months till March 31, 2022, or till guarantees for the overall ceiling of Rs 4.5 lakh crore are issued, whichever is earlier. The scheme launched in May last year was extended from October last year to November and then to March 2021 followed by June and then September along with subsequent expansion in scope as well to include more sectors and markets.

The Ministry of Finance also announced that the date of disbursement under the scheme has also been extended to 30 June 2022. 

Following are the modifications for MSMEs:

  • Existing borrowers under ECLGS 1.0 and 2.0 would be eligible for additional credit support of up to 10 percent of total credit outstanding as of February 29, 2020, or March 31, 2021, whichever is higher.
  • Businesses that have not yet availed any sort of assistance under ECLGS 1.0 or 2.0, will be eligible to avail credit support to the tune of up to 30 percent for their credit outstanding as of March 31, 2021.
  • Businesses in sectors specified under ECLGS 3.0, who have previously not availed ECLGS, can avail credit support up to 40 percent of their credit outstanding as of March 31, 2021, to the maximum of Rs 200 crore per borrower.
  • Incremental credit can be availed within these limits by existing ECLGS borrowers whose eligibility increased because of a change in cut-off date to 31.03.2021 from 29.02.2020.
  • Borrowers who have availed assistance under ECLGS and whose credit outstanding as of 31.03.2021 (excluding support under ECLGS) is higher than that on 29.02.2020 shall be eligible for incremental support within the cap stipulated under ECLGS 1.0,2.0 or 3.0.

So far the emergency credit scheme has provided relief to over 1.15 crore MSMEs and businesses. Till 24th September 2021, loans sanctioned have crossed Rs. 2.86 lakh crore under the Scheme and out of total guarantees issued, about 95% of the guarantees issued are for loans sanctioned to Micro, Small, and Medium Enterprises.

Supporting the government’s decision, the Apparel Export Promotion Council (AEPC) Chairman Dr. A Sakthivel said “ A large section of the exporters, particularly the apparel exporters, are micro, small and medium enterprises (MSMEs) and they were badly impacted due to the pandemic. This scheme is helping many MSMEs to get back to business,”.