Emergency Credit Scheme: Government Expands Size To Rs 4.5 Lakh Crore
The central government has expanded its emergency credit scheme for small businesses to Rs 4.5 lakh crore, increasing the size of the scheme by half. Making an announcement on Monday, as part of an economic support package, Finance Minister Nirmala Sitharaman said this facility will continue to support small and medium enterprises.
In addition, the government announced:
Rs 1.1 lakh-crore loan guarantee for Covid affected sectors.
Rs 50,000 crore for health sector; interest rate cap at 7.5%.
Rs 60,000 crore for other sectors; interest rate cap at 8.5%.
The emergency credit line guarantee scheme for medium and small businesses was launched in May 2020 under the government’s ‘Atmanirbhar’—or self-sufficiency—package to mitigate economic distress from the Covid-19 pandemic and subsequent lockdowns.
Under the scheme, the government had initially planned to offer guarantees to Rs 3 lakh crore in loans to stressed small businesses.
So far, Rs 2.69 lakh crore in loans have been disbursed, leaving little room to provide support to businesses hurt by the second wave of Covid infections.
The scheme over the past twelve months has been expanded to cover a host of sectors. Most recently, the eligible list of sectors was widened to include hospitals, nursing homes, clinics and oxygen generation plants. The civil aviation sector was also permitted to avail loans under the scheme and the conditions for the hospitality, travel and tourism, leisure and sporting sectors were eased.
Relief For Micro Borrowers
In order to provide support to borrowers of micro finance institutions, the government has said it will introduce a new loan guarantee scheme.
Rs 7,500 crore in guarantee to be provide for banks for lending to micro-finance institutions. This is intended to support lending of up to Rs 1.25 lakh per household.
All borrowers, including those overdue by up to 89 days, will be eligible.
Loan rate will be set at marginal cost lending rate of banks, plus 2%.
The scheme is applicable till March 31, 2022.
By: via @AlliesFin Serve Stock Market
