Express news service
NEW DELHI: The government plans to extend its Emergency Line of Credit Guarantee Program (ECLGS) until March 31, 2022, as more than Rs 1.60 lakh crore remains unused. “The ECLGS device was well received by MSMEs during the Covid period. However, the pace of disbursements has been slower than expected. We plan to extend the program for another six months, until March 2022, ”a senior finance ministry official told TNIE.
The existing limit for the ECLGS program, announced as part of the Atmanirbhar Bharat Abhiyan package Rs 20-lakh crore in May 2020, was Rs 3 lakh crore. After that, the Ministry of Finance extended the reach of ECLGS to Rs 3 lakh crore by including concessional loans to hospitals for setting up oxygen production plants on site. Its validity was extended for three months until September 30 and until guarantees in the amount of Rs 3 lakh crore were issued.
On June 28, the Ministry of Finance increased the ECLGS limit from Rs 3 lakh crore to Rs 4.5 lakh crore, by 50%. As part of ECLGS 4.0, 100% guarantee has been given for loans of up to Rs 2 crore to hospitals, nursing homes, clinics and medical schools for the establishment of health factories. oxygen generation.
The interest rate on these loans has been capped at 7.5%, which means banks can offer loans below this limit. However, slow disbursements remained a problem. According to officials, banks are disbursing over Rs 2 lakh crore under ECLGS until mid-July.
While they claim to have sanctioned around Rs 2.90 lakh crore until September 15th, the actual disbursement is less than that. Even the parliamentary standing committee on industry had observed the gap between sanctions and disbursements as banks withhold disbursements, fearing defaults in the wake of the second wave.
The interest rate on these loans has been capped at 7.5%, but banks can offer loans at lower rates. However, slow disbursements remained a problem.