Tribune News Service
New Delhi, November 2
Faced with a continuing reluctance of the industry to borrow, the government has extended the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs by one month till November 30 with the hope that the festival season might see higher offtakes.
“This extension will provide a further opportunity to such borrowers who have not availed of the scheme so far, to obtain credit under the scheme,” said an official news release.
While banks have been quick to sanction loans, actual disbursements have been slow. The Government said the scheme has been extended after Rs 2.03 lakh crore has been sanctioned so far to 60.67 lakh borrowers while actual disbursals are just Rs 1.48 lakh crore, six months after the scheme was launched.
Another Rs 30,000-crore special liquidity scheme which was closed on the due date saw less than a quarter of funds were disbursed to stressed NBFCs.
Announced in May, the ECLGS has had a sluggish past despite review meetings with bankers at the highest levels by PM Narendra Modi and Union Finance Minister Nirmala Sitharaman.
Over the past few months, the Government has added several sweeteners to the scheme such as doubling the loan ceiling to doctors, lawyers and CAs.
The slow sanctioning of loans has dogged the scheme from the start and was flagged by the RSS-aligned Laghu Udyog Bharti in interactions with Sitharaman.
The Finance Ministry felt the extension of the scheme till November 30 will see renewed off-take by the industry because of the opening up of several sectors in the economy and the expected increase in demand during the ongoing festive season.
The scheme caps the interest rate at 9.25 per cent for banks and FIs, and at 14 per cent for NBFCs with a loan tenor of four years, including a one- year moratorium on principal repayment. It was announced as part of the PM’s Rs 20-lakh crore economic package.