Emergency Credit Line Guarantee Scheme
- The Union Budget for 2022-23 has announced several measures for the micro, small and medium enterprises (MSMEs) sector that included extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023.
- Union Finance Minister Nirmala Sitharaman, while tabling the Union Budget, said ECLGS had provided much-needed additional credit to more than 130 lakh MSMEs.
- This helped them mitigate the adverse impact of the COVID-19. Hospitality and related services, especially those provided by micro and small enterprises, were yet to regain their pre-pandemic level of business.
- Considering these aspects, the government extended the scheme by ₹50,000 crore taking the total cover under the scheme to ₹5 lakh crore, with the additional amount being earmarked exclusively for hospitality and related enterprises.
- Further, the Centre said Credit Guarantee Fund Trust for Micro and Small Enterprises scheme will be revamped with the required infusion of funds. This will facilitate additional credit of ₹2 lakh crore for Micro and Small Enterprises and expand employment opportunities.
- To help the MSME sector become more resilient, competitive and efficient, the Centre will roll out Raising and Accelerating MSME Performance (RAMP) programme with an outlay of ₹6,000 crore over 5 years.
- The Budget document also said that Customs-duty exemption given to steel scrap last year was being extended for another year to provide relief to secondary MSME steel producers.
- The scheme was launched as part of the Aatmanirbhar Bharat Abhiyan package announced in May 2020 to mitigate the distress caused by coronavirus-induced lockdown, by providing credit to different sectors, especially Micro, Small and Medium Enterprises (MSMEs).
- 100% guarantee coverage is being provided by the National Credit Guarantee Trustee Company, whereas Banks and Non Banking Financial Companies (NBFCs) provide loans.
- The credit will be provided in the form of a Guaranteed Emergency Credit Line (GECL) facility.
- No Guarantee Fee shall be charged by NCGTC from the Member Lending Institutions (MLIs) under the Scheme.
- Interest rates under the Scheme shall be capped at 9.25% for banks and FIs, and at 14% for NBFCs.
Source: THE HINDU.