The Finance Ministry on Sunday announced the expansion of the Emergency Loan Facility Guarantee Scheme (ECLGS) worth Rs 3 lakh crore. Under this, hospitals receive subsidy loans to set up an oxygen production plant. In addition, the validity of the scheme has been extended for three months till September 30 or a guaranteed loan of Rs 3 lakh crore, the ministry said in a statement.
The loan disbursement period under the scheme has been extended to December 31. “Given the barriers that businesses in various sectors of the economy face due to the second wave of the Kovid-19 epidemic, the government has further expanded the scope of the Emergency Loan Facility Guarantee Scheme.” Under ECLGS 4.0, loans up to Rs 2 crore will be provided to hospitals, nursing homes, clinics and medical colleges (on-site) oxygen production plants on campus.
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The interest rate on these loans is set at 7.5 per cent. That is, banks can lend less than this threshold. According to the ministry, “According to the RBI Guidelines dated May 5, 2021, borrowers who are eligible for restructuring and who have obtained loans under ECLGS 1.0 for a total period of four years (including repayment of interest in the first 12 months only) are now allowed to repay the principal and interest for the next 36 months The loan will be available for a period of five years, meaning that the principal and interest will be paid only in the next 36 months with interest paid for the first 24 months.
Under the new plan, restructured according to RBI guidelines dated May 5, 2021, borrowers under ECLGS 1.0 have 10 per cent of the outstanding balance till February 29, 2020, the statement said. Additional ECLGS support is available.
“The government has removed the current Rs 500 crore loan balance for eligibility under ECLGS 3.0, but this is limited to the maximum additional ECLGS assistance of Rs 40 or 200 crore per borrower, whichever is less.” The field is now eligible.
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“These amendments to ECLGS will strengthen the usefulness and impact of ECLGS by providing additional support to Micro, Small and Medium Enterprises (MSMEs), securing livelihoods and seamlessly resuming business activities,” the ministry said. These changes will ensure the availability of corporate credit in appropriate terms.
ECLGS 3.0 covers areas related to hotels, travel and tourism, entertainment and sports. It has entities whose total debt does not exceed Rs 500 crore as of February 29, 2020. Also, if there is any backlog, it should be 60 days or less. Under ECLGS-3 the loan period is 6 years. This includes a two-year deferral period. Under this scheme, commercial banks and non-bank finance companies have raised Rs 2.46 lakh crore from Rs 3 lakh crore at the end of February.
