Tag: Emergency Credit Line Guarantee Scheme (ECLGS)

Categories
MSME

Emergency Credit Line Guarantee Scheme 2.0 Now Extended to SMA-1 Borrowers

ECLGS Now Applicable to SMA-1 | Representational Image
ECLGS Now Applicable to SMA-1 | Representational Image

The Department of Financial Services said in a tweet that the scope of Emergency Credit Line Guarantee Scheme (ECLGS) 2.0 has now been extended to cover the Special Mention Accounts- 1 (SMA). The DFS took to Twitter and wrote, “Scope of ECLGS 2.0 expanded! SMA-1 borrowers in the healthcare sector and 26 other high stress sectors (as identified by the Kamath Committee) are now eligible under ECLGS 2.0.” The Emergency Credit Line Guarantee Scheme 2.0 was launched by the government to help the business, especially firms in the micro, small and medium sector in wake of coronavirus pandemic last year. Emergency Credit Line Guarantee Scheme: What is ECLGS? Are You Eligible? Know All About It.

The scheme comprises all micro, small and medium borrowers accounts with combined outstanding loans across all MLIs (member lending institution) of up to Rs 50 crore in any sector and up to Rs 500 crore in respect of borrowers in the hospitality sector, travel and tourism sector and leisure and sporting sector and classified as regular, Special Mention Accounts-0 or Special Mention Accounts-1 as on February 29, 2020, according to the scheme’s website. MSME Credit Moves Towards Pre-Pandemic Levels, Witnesses a Growth of 5.7%: Report.

The Special Mention Accounts (SMA) are those which are exhibiting signs of incipient stress resulting in the borrowers defaulting in timely servicing of their debt and borrowing obligations, though the accounts have not yet been classified as Non Performing Assets (NPAs) according to the guidelines issued by the Reserve Bank of India. In the case of Special Mention Accounts-1, the overdue period is between 31 to 60 days.

The amount of Emergency Credit line to be extended to Business Enterprises or the firms in the micro, small and medium enterprises would be upto 20 per cent of total outstanding as on Feb 29,2020. The interest rate charged on such borrowing is capped at 9.25 per cent for banks and 14 per cent for the Non-Banking Financial Corporations (NBFCs). It has a maximum tenure of four years from the date of disbursement and the moratorium period on the principle amount is 12 months.

Categories
MSME

MSME Credit Moves Towards Pre-Pandemic Levels, Witnesses a Growth of 5.7%: Report

MSME Credit Grows at 5.7% | Representational Image (Photo Credits: Pixabay)
MSME Credit Grows at 5.7% | Representational Image (Photo Credits: Pixabay)

The latest MSME Pulse Report by TansUnion CIBIL shows that the credit in the Micro, Small and Medium Enterprises have witnessed a growth owing to the support of central government’s Emergency Credit Line Guarantee Scheme (ECLGS). As per the recent report, the MSME credit grew by 5.7 per cent YoY and around 3.5 QoQ in September 2020. The report also indicated that the Public Sector Banks are progressively taking the lead in providing quick loans and credits to the MSME sector, thereby ensuring an increased market share for themselves. Not only the PSBs, even the private sector banks are moving back to the pre-COVID-19 levels, with 22 per cent YoY growth in inquiries in December 2020. For the public sector banks, the same was recorded at 9 per cent. Indian SMEs Plan To Expand Businesses As Economy Revives, Restoration of Business Activities Likely To Gain Momentum Post COVID-19 Era: Survey.

Meanwhile, the inquiry trends in Commercial credit touched pre-COVID levels of 13 per cent in December 2020 after experiencing a sharp plunge in April 2020 owning to the coronavirus outbreak and the subsequent economic lockdown. The total on-balance sheet commercial lending exposure in India stood at Rs 71.25 Lakh Crore with a growth rate of 2.1 per cent YoY as in September 2020. As per report, for MSME sector it stood at Rs 19.09 Lakh Crore with a yearly growth rate of 5.7 per cent in all the sub segments of micro, small and medium enterprises. The Centre released the 17tth Installment of GST Compensation: What it means for States & UTs?

As per the MSME Pulse Report, the high risk MSME borrowers with a CIBIL rank between 7 to 10 secured the maximum benefits from the rise in approval rates. Meanwhile, the NPA (Non-Performing Asset) ratio saw a decline to 12.1 per cent in September 2020. It is being reasoned as a consequence of the Supreme Court order of not declaring NPAs till further notice. Moreover, as per a finance ministry release, total loans sanctioned under ECLGS stand at Rs 2.1 Lakh Crore of which Rs 1.65 Lkah Crore has already been disbursed.

Categories
MSME

MSME Sector in India Gets Major Boost As Banks Sanction Rs 2.05 Lakh Cr Loans to 81 Lakh MSMEs Under Credit Guarantee Scheme

New Delhi, December 12: With an aim to help the MSME sector which was impacted by disruptions caused due to the coronavirus pandemic, the Finance Ministry on Friday said banks have sanctioned loans worth Rs 2,05,563 crore to about 81 lakh accounts under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector. In a series of tweets, the Finance Ministry said that as many as 40 lakh MSME accounts have received Rs 1,58,626 crore till December 4. Another tweet informed that Rs 3 lakh cr Collateral-Free Guaranteed Loans – Budgetary provision of Rs 4,000 crore made for the Scheme in First Supplementary Demand for Grants for FY 2020-21.

While announcing the Aatmanirbhar Bharat Package 3.0, Finance Minister Nirmala Sitharaman had said that Rs 2.05 lakh crore sanctioned and Rs 1.52 lakh crore disbursed under ECLGS 1.0. “As part of the Atmanirbhar Bharat Abhiyan 3.0 (announced on November 12), ECLGS Scheme has been extended through ECLGS 2.0 for the 26 stress sectors and health care sector with credit outstanding of above Rs 50 crore and up to Rs 500 crore as on February 29, 2020,” a tweet said. Credit Guarantee Scheme: Banks Sanction Rs 1.86 Lakh Cr to 50 Lakh MSMEs Impacted by Slowdown Amid COVID-19 Pandemic.

The Finance Ministry said that under ECLGS 2.0, entities with outstanding credit above Rs 50 crore and not exceeding Rs 500 crore as on February 29, 2020, which were less than or equal to 30 days past due as on February 29, 2020 are eligible. The loans provided under ECLGS 2.0 will have a five-year tenor, with a 12-month moratorium on repayment of principal. Meanwhile, the entire Scheme (ECLGS 1.0 and ECLGS 2.0) valid till March 31, 2021, it said.

As part of the Aatmanirbhar Bharat Package, the government has announced to cover 2.5 crore farmers under the KCC scheme with a credit boost of Rs 2 lakh crore through a special saturation drive.

Categories
MSME

ECLGS for MSMEs: Banks Sanction Rs 1.87 Lakh Cr to 50.7 Lakh Business Units Under Credit Guarantee Scheme

Money (Photo Credits: Unsplash)

New Delhi, October 10: In a bid to help the micro, small and medium enterprises (MSMEs) sector, which has been the worst-hit by the COVID-19 pandemic, the Finance Ministry announced that banks have sanctioned loans of about Rs 1,87,579 crore to 50.7 lakh business units under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector. Reports inform that of the 50.7 lakh business units, about 27 lakh MSME units received cumulative disbursement of Rs 1,36,140 crore till October 5.

The scheme is the biggest fiscal component of the Rs 20-lakh crore Atmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May 2020 to mitigate the distress caused by lockdown due to COVID-19 by providing credit to different sectors, especially MSMEs. As released by the Finance Ministry, the latest numbers on ECLGS comprise disbursements by all 12 public sector banks (PSBs), 24 private sector banks and 31 non-banking financial companies (NBFCs).

“As of 5 Oct 2020, the total amount sanctioned under the 100% Emergency Credit Line Guarantee Scheme by PSBs, private banks & NBFCs to MSMEs and individuals stands at Rs 1,87,579 cr, of which Rs 1,36,140 cr has already been disbursed,” the finance minister said in a tweet. The loan amounts sanctioned by PSBs increased to Rs 81,648.82 crore, of which Rs 68,814.43 crore has been disbursed as of October 5, Sitharaman further added. At the same time, private sector banks have sanctioned Rs 86,576 crore of loans and disbursed Rs 59,740 crore, while NBFCs sanctioned Rs 3,032 crore with disbursement of Rs 2,227 crore.

“The ambit of the Scheme was expanded to include MSMEs with turnover of up to Rs 250 crore & individuals for business purposes. As of 05 Oct 2020, Rs 17,460 crore of loans to individuals have been sanctioned, of which Rs 5,939 crore has been disbursed,” she in a tweet. In another tweet, Sitharaman said as many as 33 stranded housing projects with investment of Rs 4,197 crore were accorded final approval under the SWAMIH scheme. “Special window for Affordable & Mid Income Housing Fund (SWAMIH) is working at a fast pace to provide relief to homeowners. As on 05.10.2020, 33 projects with investment of Rs 4,197 cr accorded final approval & will lead to completion of 25,048 home units,” the finance minister said in tweet.

The overall, 123 projects have now been sanctioned, including final approval to 33 projects, with an investment of Rs 12,079 crore that would target to provide relief to 81,308 homeowners, she said. On May 20, the Cabinet approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for MSME sector.

Under the scheme, 100 percent guarantee coverage will be provided by the National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of a guaranteed emergency credit line (GECL) facility. According to a report by PTI, for this purpose, a corpus of Rs 41,600 crore was set up by the government, spread over the current and next three financial years. The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till the amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier.

Categories
Business motivation

Emergency Credit Line Guarantee Scheme: What is ECLGS? Are You Eligible? Know All About It

निर्यात कारोबार
निर्यात कारोबार

MSMEs have emerged as the backbone of our economy and no one can deny this. This sector contributes heavily to the GDP and has been actively providing livelihood to many. Due to the ongoing pandemic, this backbone has been hurt quite badly. Considering the current misery of the MSMEs, the government came into action and introduced new schemes and policies that could help these businesses stay afloat.

One such Scheme is ECLGS which stands for Emergency Credit Line Guarantee Schemes which has been introduced by the government to ensure the reinforcement of the financial structure of the micro, small, and medium enterprises across the nation.

What Exactly Is ECLGS?

On the 15th of May,2020, our ministry of finance announced a scheme with a vision to help the MSMEs of India get back on their feet. This scheme was a part of the Rs 20 lakh crore package that was brought forward and executed by our finance minister Nirmala Sitharaman to repair the damage that has been done to this sector in the light of COVID-19.

Are You Eligible?

To avail the said scheme, a Business should have total outstanding credit adding up to Rs.25 crore as of 29th February 2020. Also, the borrower should be able to prove that their business has produced a turnover of Rs 100 crore for the financial year 2019-2020.

 

  • To reap the benefits of the said scheme, a business must be recognized as a trust, partnership, proprietorship, registered company, or limited liability partnership.
  • The Scheme will be available only for existing customers on the books of the MLI.
  • For a seamless execution, enterprises are supposed to be ready with all the GST registration paperwork as well as other business-related documents. However, businesses that do not require GST registration, can also go forward applying for the same.

What About The Rate Of Interest?

Based on the body that is providing you the loan, the rate of interest would vary. We have mentioned below a bifurcation of the various rates of interests at which the loan will be sanctioned to the eligible MSMEs and enterprises.

 

  1. Non-Bank Financial Company: NBFCs have decided to give out loans under ECLGS scheme at an interest rate of 14% per annum and are very strict about not passing the threshold.
  2. Banks And Financial Institutions: The interest rate under the scheme is capped at 9.25% per annum for banks and financial institutions.
  3. MLI (multilateral Institutions): A sigh of relief for the existing customers of MLIs as no fee is to be charged to them.

Don’t Miss Out On These Details

  • All the businesses/borrowers that are thinking to apply for loans under the respective scheme must know that there is a 1-year moratorium on the principal amount that you will have to repay.
  • If you don’t repay the entire principal amount within the moratorium period, the rest of the amount will have to be repaid in the overall tenure of 3 years dividing it into 36 monthly installments.
  • Please be wary of the fact that the borrower will have to open a separate account for this loan altogether. The borrower will not be allowed to use any account that has been opened and already used to serve other purposes.

This scheme has the right potential to help out the MSME sector put an end to their misery and regain financial stability. All in all, the government has taken the necessary step to fill the gaps, now it’s up to the MSMEs if they want to grab the opportunity to strengthen and solidify their position in the market. 

 

Categories
Finance MSME

Indian Banks Have Sanctioned Rs 1.63 Lakh Crore Loans to MSMEs Under ECLGS, Says Finance Ministry

Union Finance Minister Nirmala Sitharaman. (Photo Credit: PIB)
Union Finance Minister Nirmala Sitharaman. (Photo Credit: PIB)

New Delhi, September 13: The Union Finance Ministry on Sunday said that Indian banks have sanctioned loans worth over Rs 1.63 lakh crore to MSMEs and other eligible businesses so far. These loans have been sanctioned under the Emergency Credit Line Guarantee Scheme (ECLGS) for over 42 lakh borrowers and till now over Rs 1.18 lakh crore has been disbursed, the Ministry added.

Informing about the sanctioned status, the Union Finance Ministry took said in a statement, “As on 10.09.2020, as reported by Public Sector Banks and top 23 private sector banks, additional credit amounting to Rs 1,63,226.49 crore has been sanctioned to 42,01,576 borrowers. Amount of Rs 1,18,138.64 crore has been disbursed to 25,01,999 borrowers as on 10.09.2020.”

Laying down the progress of the schemes announced under the Aatmanirbhar Bharat economic package in May, the Union Ministry said that around 37 proposals involving an amount of Rs 10,590 crore have been approved under the Rs 30,000 crore Special Liquidity Scheme for NBFCs, housing finance companies and micro-finance institutions till September 11. Adding more, it said, six more applications seeking financing of Rs 783.5 crore are under process.

On the Rs 30,000 crore Additional Emergency Working Capital Funding for farmers through NABARD, the ministry said that as on August 28, 2020, Rs 25,000 crore has been disbursed. The balance amount of Rs 5,000 crore under the Special Liquidity Facility (SLF) has been allocated to NABARD by the RBI for smaller NBFCs and NBFC-MFIs. Also, ANABARD is finalising operational guidelines to roll it out soon.

Apart from this, the Centre said that NABARD has also launched Structured Finance and Partial Guarantee scheme in collaboration with two agencies and banks to help unrated NBFCs and MFIs to get credit from lenders. The mechanism will enhance eligibility of credit by 5-6 times to those small MFIs who do not have any rating.

Among other details, the ministry said that refunds of over Rs 1.01 lakh crore have been issued to more than 27.55 lakh taxpayers between April 1, 2020, and September 8, 2020. Also, income tax refunds of Rs 30,768 crore have been issued in 25,83,507 cases and corporate tax refunds of Rs 70,540 crore have been issued in 1,71,155 cases. The ministry said that all corporate tax refunds up to Rs 50 crore have been issued in all cases.

Categories
Finance

MSME Credit Guarantee Scheme: Banks Disburse More Than Rs 1 Lakh Crore Under ECLGS as Part of Atmanirbhar Bharat Package

रुपया
Money

The banks have disbursed more than Rs 1 lakh crore under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, the finance ministry said. The loans have been disbursed fall under Atmanirbhar Bharat Package. The latest numbers on ECLGS, as released by the finance ministry has disbursements by all 12 public sector banks (PSBs), 24 private sector banks and 31 non-banking financial companies (NBFCs). The total amount sanctioned under the scheme by banks now stands at Rs 1,50,759.45 crore, of which Rs 1,02,245.77 crore has already been disbursed as of August 18. “Under the 100 per cent ECLGS backed by a Government of India guarantee, banks from public and private sectors have sanctioned loans worth over ₹1.5 lakh crore as of August 18, 2020, of which more than ₹1 lakh crore has already been disbursed,” the Finance Ministry said in a statement.

The disbursement will largely help the MSME sector that has been impacted by the economic slowdown due to COVID-19. The ECLGS was announced by the Government as a part of Atmanirbhar Bharat Package, to mitigate the distress caused by lockdown due to coronavirus lockdown by providing credit to different sectors, especially MSMEs.

Meanwhile, the sanctioned amount too have surged past Rs 1.50 lakh crore at the end of August 18 under the 100 per cent ECLGS for micro, small and medium enterprises. The scheme is the biggest fiscal component of the Rs 20-lakh crore Atmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May.

Key Highlights:

1. Business units of Maharashtra have got the highest cumulative sanction of Rs 7,756 crore from banks, while disbursement stood at Rs 6,007 crore at the end of August 18.
2. Tamil Nadu is the second state which has received a sanction of Rs 7,740 crore, and disbursement of Rs 5,693 crore.
3. The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till the amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier.
4. The top lenders under the scheme are State Bank of India (SBI), Canara Bank, Punjab National Bank (PNB), Bank of India, Union Bank of India and HDFC Bank.
5. The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till the amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier.

The Finance Ministry said that under the ECLGS, Public Sector Banks (PSBs) have sanctioned loans of Rs 76,044.44 crore, out of which Rs 56,483.41 crore has already been disbursed whereas Private Sector Banks have sanctioned loans of Rs 74,715.02 crore out of which Rs 45,762.36 crore has already been disbursed. On May 20, the Cabinet approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for MSME sector.

All MSME borrower accounts with an outstanding credit of up to Rs 50 crore as on February 29, which were less than or equal to 60 days past due as on that date, i.e., regular, SMA-0 and SMA-1 accounts, and with an annual turnover of up to Rs 250 crore, are eligible for GECL funding under the scheme.

Categories
Finance Process & Business Expansion Startup Strategy

Emergency Credit Facility Under ECLGS for Small Businesses Hiked From Rs 25 Crore to Rs 50 Crore, NCGTC Modifies Operational Guidelines

MSME (Photo Credits:
Emergency Credit Facility Under ECLG for small businesses hiked from Rs 25 crore to Rs 50 crore by NCGTC. | Representational Image.

New Delhi, August 12: The National Credit Guarantee Trustee Company Ltd (NCGTC) on Wednesday issued a circular regarding the modification of operational guidelines for Emergency Credit Line Guarantee Scheme (ECLGS). The common trustee company informed that the new operational guidelines will now cover individuals and more enterprises amid the COVID-19 pandemic.

Informing about the minutes of the modification of operational guidelines for ECLGS, the NCGTC stated that the upper ceiling of loans — outstanding as on February 2, 2020 — has been increased under the scheme from Rs 25 crore to Rs 50 crore. Apart from this, there has been a hike in the upper ceiling of annual turnover from Rs 100 crore to Rs 250 crore. This has been done in line with the increased ceiling of loans outstanding and revised definition of MSME issued by Union Ministry of MSME.

Among other details, the NCGTC circular stated that there has been an increase in the maximum amount of NCGTC to Member Lending Institutions (MLIs) under the ECLGS. The amount limit has been raised from Rs 5 crore — at present 20 per cent of Rs 25 crore — to Rs 10 crore, which is 20 per cent of Rs 50 crore. However, it has been made clear that those individual loans given for business purposes should fulfil the eligibility criteria prescribed under the scheme.

NCGTC Circular Regarding the Modification of Operational Guidelines for ECLGS:

Earlier on May 23, 2020, the NCGTC was set up by the Ministry of Finance’s Department of Financial Services as a common trustee company to manage and operate various credit guarantee trust funds. It was incorporated under the Indian Companies Act, 1956 on March 28, 2014, with a paid-up capital of Rs 10 crore.

Under the NCGTC, five trust funds currently operate:

1) Credit Guarantee Fund for Skill Development (CGFSD
2) Credit Guarantee Fund for Education loans (CGFEL)
3) Credit Guarantee Fund for Factoring (CGFF)
4) Credit Guarantee Fund for Micro Units (CGFMU)
5) Credit Guarantee Fund for Standup India (CGFSI)

The NCGTC was launched ECLGS on May 23, 2020, for all the financial institutions of India. Among the four key points, which differs it from other schemes include — 100 per cent credit guarantee, zero guarantee fee for banks and customers, pre-approved loans and minimum bank’s risk weight allocation. However, the scheme will continue till October 31, 2020, or till the time Rs 3 lakh crore of the loan amount is sanctioned. The NCGTC has also made it clear that borrowers must be GST registered wherever it is necessary.