India last week widened the scope of the 3 lakh crore credit guarantee scheme for micro, small and medium enterprises (MSMEs) by doubling the upper ceiling of loans outstanding to 50 crore and including certain individual loans given to professionals like doctors, lawyers and chartered accountants for business purposes under its ambit.
The amendment to the Emergency Credit Line Guarantee Scheme (ECLGS) was done based on feedback from trade organisations and in line with new MSME definition approved by the cabinet in June. Finance minister Nirmala Sitharaman said the scheme will now include individual loans given for business purposes within the ambit of the ECLGS, subject to the eligibility criteria of the scheme.
“We have also decided to cover individual loans given to doctors, chartered accountants for business purposes under the scheme,” financial services secretary Debasish Panda said. Similar procedure as with regard to companies would be adopted to sanction loans to these professionals running their business, he was quoted as saying by Indian media reports.
To include more companies to take benefit of the scheme, he said, it has been decided to increase the upper ceiling of loans outstanding as on February 29 for being eligible under the scheme from 25 crore to 50 crore. The maximum amount of guaranteed emergency credit line (GECL) funding under the scheme would also correspondingly increase from 5 crore at present to 10 crore, he said.
Announced as part of the Rs 20.97 lakh crore government economic package to tackle the impact of COVID-19, the scheme will now be applicable for companies with an annual turnover of 250 crore as against the earlier 100 crore. The overall ceiling for the scheme remains at 3 lakh crore and the validity of the scheme is till October, he added.
The finance minister said that the intended changes are likely to expand the ambit of ECLGS to make an additional amount of more than 1 lakh crore eligible under the scheme.
“We welcome the decision of the government to increase the outstanding loan limit from 25 crore to 50 crore and for raising the turnover criteria from 100 crore to 250 crore for availing ECLGS,” chairman of Apparel Export Promotion Council A Sakthivel said.
“While more than half of the targeted additional funding is yet to be sanctioned, there are many medium scale industrialists who are bereft of the special financial assistance. The need of the hour is to expand the outstanding loan limit to 100 crores and there should be no turnover criteria for exporters,” he added.
