In a bid to facilitate more individuals and MSMEs, the ministry of Finance has augmented scope of the government's Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) launched for MSMEs. Now more businesses will be able to raise credit as the centre has hiked the upper limit of loan outstanding, as on 29 February 2020, to Rs. 50 crore from the earlier up to Rs. 25 lakh.
Under the government's ambitious ECLGS scheme, MSMEs could apply for emergency credit from banks and NBFCs for a sum of up to 20 percent of their outstanding loan amount. As a result, with the expansion in its scope, now borrowers will be able to secure credit up to Rs. 10 crore, which is 20% of Rs. 50 crore, as against Rs. 5 crore - which is 20% of the earlier prescribed limit of Rs. 25 crore.
Also, the government has hiked the annual turnover limit for being eligible for seeking credit under the scheme to Rs. 250 crore from Rs. 100 crore "in line with the increased ceiling of loans outstanding, and the revised definition of MSMEs issued by the Ministry of MSME", as per the
according to the notification sent by the state-owned National Credit Guarantee Trustee Company (NCGTC) to the chiefs of all scheduled commercial banks, financial institutions, and NBFCs.
"We advise you to make best use of the modifications made and ensure maximum utilization under the scheme," the notification signed by NCGTC CEO Durgesh Pandey read. NCGTC functions as a trustee for several credit guarantee funds.
In May, Finance Minister Nirmala Sitharaman introduced the ECLG scheme as part of the Rs. 3.7 lakh crore stimulus relief for MSMEs as part of the larger Rs. 20 lakh crore package announced to revive the economy hit by Covid 19 outbreak. The scheme can be availed until October 31, 2020. In accordance with the Atmanirbhar Bharat campaign presentation, 45 lakh MSMEs affected on account of Covid 19 will be "able to resume business activity and safeguard jobs".