Cabinet approves additional funding of upto Rs 3 lakh cr for MSMEs, Mudras
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Cabinet approves additional funding of upto Rs 3 lakh cr for MSMEs, Mudras

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New Delhi, May 20 : The Union Cabinet, chaired by Prime Minister Narendra Modi on Wednesday gave the approval to enable additional funding of up to Rs three lakh crore to eligible MSMEs and interested Mudra borrowers by way of 'Emergency Credit Line Guarantee Scheme'.

Under the Scheme, 100 per cent guarantee coverage to be provided by National Credit Guarantee Trustee Company Limited (NCGTC) for additional funding of up to Rs three lakh crore to eligible MSMEs and interested MUDRA borrowers, in the form of a Guaranteed Emergency Credit Line (GECL) facility. For this purpose, corpus of Rs 41,600 crore shall be provided by the Government spread over the current and the next three financial years.

The Cabinet also approved that the Scheme would be applicable to all loans sanctioned under GECL Facility during the period from the date of announcement of the Scheme to October 31, 2020, or till an amount of Rs 3,00,000 crore is sanctioned under the GECL, whichever is earlier. The Emergency Credit Line Guarantee Scheme (ECLGS) has been formulated as a specific response to the unprecedented situation caused by COVID-19 and the consequent lockdown, which has severely impacted manufacturing and other activities in the MSME sector.

The Scheme aims at mitigating the economic distress being faced by MSMEs by providing them additional funding of up to Rs. 3 lakh crore in the form of a fully guaranteed emergency credit line. The main objective of the Scheme is to provide an incentive to Member Lending Institutions (MLIs) -- Banks, Financial Institutions (FIs) and Non-Banking Financial Companies (NBFCs) -- to increase access to, and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by providing them 100 per cent guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers.

All MSME borrower accounts with outstanding credit of up to Rs 25 crore as on February 29, 2020 which were less than or equal to 60 days past due as on that date, i e, regular, SMA 0 and SMA 1 accounts, and with an annual turnover of up to Rs. 100 crore would be eligible for GECL funding under the Scheme.

The amount of GECL funding to eligible MSME borrowers either in the form of additional working capital term loans (in case of banks and FIs), or additional term loans (in case of NBFCs) would be up to 20 per cent of their entire outstanding credit up to Rs 25 crore as on February 29, 2020. The entire funding provided under GECL will be provided with a 100 per cent credit guarantee by NCGTC to MLIs under ECLGS. More (UNI)

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