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The Finance Ministry has allowed airlines to avail themselves of loans up to 100 per cent of their requirement under the Emergency Credit Line Guarantee Scheme (ECLGS), subject to conditions. This modification comes at a time when many airlines are in the red.
Version 3.0 of the scheme has been modified to enhance “the maximum loan amount eligibility for airlines to 100 per cent of their fund-based or non-fund-based loan outstanding as on the reference dates or ₹1,500 crore, whichever is lower; and of the above, ₹500 crore shall be considered, based on equity contribution by the owners”, a ministry statement on Wednesday said. According to operational guidelines, as modified on August 30, 2022, reference date under ECLGS 3.0 is March 31, 2021.
Earlier, borrowers were allowed 50 per cent of their highest total fund- and non-fund-based credit outstanding, subject to a maximum of ₹400 crore per borrower.
“The modifications introduced are aimed to give necessary collateral-free liquidity at reasonable interest rates to tide over their present cash flow problems,” the statement said. Data from Bombay Stock Exchange (BSE) shows that two listed airlines, Indigo and Spicejet, are in loss even as traffic picks up. Important reasons for the loss include higher prices of crude and depreciating rupee. Other airlines such as Air India, Vistara, Air Asia and Go are also in loss, though their figures are not known as they are not listed.
Earlier, in August, the Cabinet had approved an enhancement in theECLGS limit by ₹50,000 crore — from ₹4.5 lakh crore to ₹5 lakh crore, with the additional amount earmarked exclusively for enterprises in hospitality and related sectors. This was sparked by the severe disruptions caused by the Covid-19 pandemic in these sectors. In March the scheme was extended beyond March 2022 to March 2023, as per the announcement made in the Union Budget 2022-23 by Finance Minister Nirmala Sitharaman.
ECLGS was launched in May 2020 as part of the Aatmanirbhar Bharat Abhiyaan programme to support micro, small and medium enterprises (MSMEs) and other businesses in meeting operational liabilities and restarting post pandemic. Under this, 100 per cent guarantee is provided to member lending institutions (MLIs) for the credit facility extended by them to borrowers. Later, based on the recommendations of the Kamath Committee, 26 sectors were included in the scheme.
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