Advertisement
trendingNowenglish2575268https://zeenews.india.com/economy/finmin-to-meet-heads-of-banks-on-february-22-to-review-progress-eclgs-for-msmes-2575268.html

Finmin to Meet Heads of Banks on February 22; To Review Progress ECLGS for MSMEs

The meeting, to be chaired by Financial Services Secretary Vivek Joshi, would also see participation from top private sector lenders HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank.

Finmin to Meet Heads of Banks on February 22; To Review Progress ECLGS for MSMEs

New Delhi: The finance ministry has called a meeting of heads of public sector banks and top four private sector lenders to review the progress of the emergency credit line guarantee scheme (ECLGS) to help businesses affected by COVID-19.

The meeting is scheduled to be held on February 22 to review progress on ECLGS and Loan Guarantee Scheme for COVID-Affected Sectors (LGSCAS), sources said.

The meeting, to be chaired by Financial Services Secretary Vivek Joshi, would also see participation from top private sector lenders HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank.

Extension of ECLGS and LGSCAS beyond March 31 as well as challenges related to these would be deliberated.

ECLGS was announced as part of the Atmanirbhar Bharat Package in May 2020 with the objective to help businesses including MSMEs to meet their operational liabilities and resume businesses in view of the distress caused by the COVID-19 crisis, by providing banks, 100 per cent guarantee against any losses suffered by them due to non-repayment of the funding by borrowers.

The overall ceiling initially announced for ECLGS was Rs 3 lakh crore which was subsequently enhanced to Rs 4.5 lakh crore.

Subsequently, the Union Budget 2022-23 announced extension validity of the Scheme up to March 2023 and increase in the limit of guaranteed cover of ECLGS by Rs 50,000 crore to a total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the enterprises in hospitality and related sectors.

Finance Minister Nirmala Sitharaman in the latest Budget said, "Last year, I proposed revamping the credit guarantee scheme for MSMEs. I am happy to announce that the revamped scheme will take effect from 1st April 2023 through the infusion of Rs 9,000 crore in the corpus.

"This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the cost of the credit will be reduced by about 1 per cent."

To ensure easy and softer repayment terms on the credit extended to the MSME sector, the government has capped the interest rate under ECLGS scheme at 9.25 per cent for Banks and Financial Institutions and 14 per cent for Non-Banking Financial Institutions. This scheme also offers a one-year moratorium on payment of the principle component.

According to a study, ECLGS has helped save at least 14.6 lakh MSMEs which benefited from Rs 2.2 lakh crore in additional credit. This additional credit flow has saved around 12 per cent of the outstanding MSME (Micro, Small and Medium Enterprises) credit from slipping into NPAs.

With the change in MSME definition, in 2020 the government mandated all the MSMEs to register under the Udyam portal, which according to the report, is the way forward for the sector.

A total of 1.33 crore MSMEs have Udyam certification now. As against this, the number of GST registration is only 1.40 crore.

Stay informed on all the latest news, real-time breaking news updates, and follow all the important headlines in india news and world News on Zee News.

NEWS ON ONE CLICK