New Delhi: Union Cabinet is expected to soon take a call on the credit guarantee scheme to support various sectors affected by the West Asia war, the Hindu reported on Tuesday.
The scheme, a version of the Emergency Credit Line Guarantee Scheme (ECGLS), is expected to cover loan worth ₹2.5 lakh crore and would be valid for four years, a senior government official told here. Further, it is likely to provide a 90 per cent credit guarantee for loans from the National Credit Guarantee Trustee Company (NCGTC). The fund will cover the loss in the event of the borrower’s default.
ECLGS was launched in May 2020 as a special initiative to provide liquidity support to businesses adversely impacted by the COVID-19 pandemic lockdown. The scheme covers all loans sanctioned under ‘Guaranteed Emergency Credit Line’ up to March 31, 2023, or until guarantees for an amount of ₹ 5 lakh crore are issued, whichever is earlier. Borrowers did not need to provide any additional security or collateral to avail of these loans. Interest rates were capped at 9.25 per cent for banks and 14 per cent for NBFCs. Also, the scheme offered a one-year moratorium on principal repayment, though interest was payable during this period.
