Rs 3-lakh-crore guaranteed loan programme: Now, cheaper credit to set up oxygen plants

By end-February, loans of Rs 2.46 lakh crore had been sanctioned beneath the scheme. The demand thereafter hasn’t risen a lot, bankers say.

The federal government on Saturday launched a brand new model of its Rs three-lakh-crore assured mortgage programme, beneath which cheaper credit score will likely be made obtainable to hospitals for organising on-site oxygen era crops to struggle the pandemic.

It additionally allowed civil aviation corporations, struggling to deal with the harm brought on by the pandemic, to faucet an earlier avatar of the Emergency Credit score Line Assure Scheme (ECLGS) by increasing its scope.

The validity of the ECLGS has additionally been prolonged by three months by means of September 30 or till ensures for the whole quantity of Rs 3 lakh crore are issued, the finance ministry mentioned in a press release. Equally, the final date of disbursement has been prolonged as much as December 31.

By end-February, loans of Rs 2.46 lakh crore had been sanctioned beneath the scheme. The demand thereafter hasn’t risen a lot, bankers say.

Underneath the ECLGS 4.0 introduced on Saturday, the federal government will supply full assure on loans as much as Rs 2 crore to hospitals, nursing properties, clinics, medical schools for organising on-site oxygen era crops. The rate of interest on these loans has been capped at 7.5%.

The ministry additionally relaxed the tenure of the mortgage reimbursement and launched extra flexibilities. Debtors who’re eligible for restructuring as per the most recent RBI tips and had availed of loans beneath ECLGS 1.0 can now repay in 5 years. They must repay solely curiosity within the first two years, which will likely be adopted by the reimbursement of principal and residual curiosity in three years thereafter.

Previous to the transfer, the mortgage tenure was 4 years. Debtors had been speculated to pay solely curiosity within the first 12 months, adopted by the reimbursement of principal and curiosity in three years after that.

Furthermore, the brand new scheme has made a provision of additional ECLGS help of as much as 10% of the excellent as of February 29, 2020, to debtors lined beneath ECLGS 1.0, in sync with restructuring beneath the RBI tips of Could 5, 2021.

Whereas permitting civil aviation corporations to faucet the ECLGS 3.0, the federal government additionally scrapped the extant ceiling of Rs 500 crore of mortgage excellent for eligibility beneath ECLGS 3.0. That is topic to a most further ECLGS help of as much as 40% or Rs 200 crore, whichever is decrease.

Earlier, the ECLGS 3.0 lined companies in hospitality, journey and tourism, leisure and sporting sectors. Eligible corporations will need to have had complete credit score excellent not exceeding Rs 500 crore as of February 29, 2020, and overdue, if any, was for 60 days or much less, on that date.

“Modifications in ECLGS would improve the utility and influence of ECLGS by offering further assist to MSMEs, safeguarding the livelihoods and serving to in a seamless resumption of enterprise exercise. These adjustments will additional facilitate the circulation of institutional credit score at affordable phrases,” the finance ministry mentioned.

The tenor of loans granted beneath ECLGS 3.0 can be 6 years, together with a moratorium interval of two years.

The ECLGS 1.0 was introduced as a part of the federal government’s Rs 21 lakh-crore aid bundle in Could 2020. Underneath this, the federal government had pledged full assure for as much as 20% additional, collateral-free working capital loans, topic to the Rs three-lakh-crore restrict. Whereas this scheme was initially meant for under MSMEs, the federal government has periodically broadened its scope to allow a wider pool of companies and professionals to profit from it.