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Govt widens scope of ECLGS 3.0 for MSME in Tourism; validity extended till March 2023

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Giving effect to Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman’s announcement in Union Budget 2022-23, the National Credit Guarantee Trustee Company Limited (NCGTC) today extended the Emergency Credit Line Guarantee Scheme (ECLGS) beyond March 2022, till March 2023.

Further, following up on the suggestions received in the post Budget consultations held by the Finance Minister on February 25, 2022, with the Travel, Tourism and Hospitality sector and the Civil Aviation sector delegation led by the Minister of Civil Aviation, NCGTC also issued modifications to the operational guidelines for ECLGS 3.0.

Keeping this in view, the coverage, scope and extent of benefits under ECLGS 3.0 pertaining to hospitality, travel, tourism and civil aviation sectors has been expanded as follows:

New borrowers in the sectors covered under ECLGS 3.0 who have borrowed after March 31, 2021, and up to January 31, 2022, will also now be eligible to avail of emergency credit facilities under ECLGS 3.0.

The extent of emergency credit facilities that may be availed of under ECLGS 3.0 has been increased for eligible borrowers in all sectors covered under ECLGS 3.0. Eligible borrowers in all such sectors (other than the civil aviation sector) are now permitted to avail up to 50 per cent of their highest fund based credit outstanding on any of three reference dates (February 29, 2020; March 31, 2021; and January 31, 2022), as against the earlier limit of 40 per cent of the higher of their fund-based outstanding on either of two reference dates (February 29, 2020, and March 31, 2021). This is subject to the existing maximum of Rs 200 crore per borrower.

Keeping in view the high proportion of non-fund based credit in the overall credit of the civil aviation sector, eligible borrowers in the civil aviation sector are now permitted to avail of non-fund based emergency credit facilities as well under ECLGS 3.0. As against the earlier limit of availing up to 40 per cent of the higher of their fund-based outstanding as on either of two reference dates, subject to a maximum of Rs 200 crore per borrower, they can now avail of up to 50 per cent of their highest total fund and non-fund based credit outstanding on any of the three reference dates referred to above, subject to a maximum of Rs. 400 crore per borrower. Further, to lower the cost of accessing non-fund-based credit, bank guarantees, letters of credit and other non-fund based facilities sanctioned under ECLGS 3.0 will be issued without any cash margin and subject to a cap of 0.5 per cent per annum on the fee/commission.

Individuals and proprietary concerns in the sectors covered under ECLGS 3.0 can also now avail of emergency credit facilities.

In order to remove any doubt regarding eligibility on this account, the sectors covered under ECLGS 3.0 have been clarified by enumerating businesses covered under them.

The modifications introduced are aimed at enabling businesses in these contact-intensive sectors to get further support through enhanced coverage and collateral-free liquidity on capped interest rates / fees.

As on March 25, 2022, loans sanctioned under ECLGS have crossed Rs 3.19 lakh crore, and about 95 per cent of the guarantees issued are for loans sanctioned to Micro, Small and Medium Enterprises.