The Centre has expanded the scope of Emergency Credit Line Guarantee Scheme (ECLGS) by permitting contact-intensive sectors to avail as much as 50 per cent of their credit score excellent as towards the sooner restrict of 40 per cent, and elevating the per borrower cap for civil aviation sector to Rs 400 crore.
The ECLGS scheme has been prolonged by one 12 months till March 2023, and permits new debtors within the hospitality and associated sectors who’ve borrowed from March 31, 2021 to January 31, 2022 to avail of funds below the scheme.
Eligible debtors in hospitality and associated sectors, besides civil aviation, can avail as much as 50 per cent of their highest fund primarily based credit score excellent on any of three reference dates — February 29, 2020, March 31, 2021 and January 31, 2022. This is a rise from the sooner restrict of 40 per cent of the best of their fund-based excellent as on two reference dates of February 29, 2020 and March 31, 2021. However, that is topic to the prevailing cap of Rs 200 crore per borrower.
Individuals and proprietary considerations in contact-intensive sectors akin to accommodations and eating places, marriage halls, canteens, journey and tourism, brokers, tour operators, automotive restore providers, spas and sweetness parlours, amongst others will even have the ability to avail credit score facility below ECLGS.
The Centre has allowed the cash-starved aviation sector to avail of fifty per cent of their credit score excellent — a mix of their highest complete fund and non-fund-based credit score excellent — topic to a cap of Rs 400 crore per borrower. Just like different contact-intensive sectors, highest credit score excellent could be referenced on any of the three reference dates of February 2020, March 2021 or January 2022.
This is a change from the earlier credit score excellent restrict of 40 per cent of the best of their fund-based excellent as on two reference dates of February 2020 and March 2021, topic to a per borrower cap of Rs 200 crore. The change has been made to assist the aviation sector that depends extra on non-fund-based credit score akin to financial institution ensures and letters of credit score.
Eligible debtors within the civil aviation sector have now been permitted to avail of non-fund primarily based emergency credit score services as nicely, and to decrease their price of accessing non-fund-based credit score, financial institution ensures, letters of credit score, amongst others can be issued with none money margin and topic to a cap of 0.5 per cent every year on the charge or fee.
“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,” the finance ministry mentioned in a launch.
However, specialists really feel that the Rs 400-crore cap for loans to the aviation sector could not carry the sector out of stress. According to a report by ranking company ICRA earlier this month, home aviation trade is anticipated to report a internet lack of Rs 25,000-26,000 crore this fiscal 12 months on the again of elevated jet gasoline costs and fare caps persevering with to pose a serious problem for the airways’ profitability.
The scheme has additionally not seen spectacular incremental sanctions even after a number of modifications, specialists added. As on March 25, 2022, loans sanctioned below the ECLGS had been Rs 3.19 trillion as in comparison with Rs 2.86 trillion sanctioned below the scheme as on September 24, 2021.