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The Government on Sunday expanded the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) by including support for onsite oxygen generation plants and declaring civil aviation as an eligible sector. Also, it has removed eligibility cap of ₹500 crore for certain specified sectors which is expected to benefit hospitality, sporting and multiplex players.
“ECLGS 4.0 (the new version of the scheme) guarantee cover for loans up to ₹2 crore will be provided to hospitals/nursing homes/clinics/medical colleges for setting up on-site oxygen generation plants,” a statement issued by the Finance Ministry said. The interest rate for such loan will be capped at 7.5 per cent.
Tweaked version
Some modifications have been done in the previous versions also. Borrowers of first version, who are eligible for restructuring as per RBI guidelines dated May 5, will now get five years for repayment. This includes repayment of interest only for the first 24 months with repayment of principal and interest in the next 36 months. Earlier, these borrowers were supposed to repay only interest during the first 12 months and repay the principal and interest in 36 months.
These borrowers will also be eligible for additional ECLGS assistance of up to 10 per cent of the outstanding as on February 29, 2020. The Government has made important changes in Version 3 of the scheme. Now, the civil aviation sector has been included as an eligible sector, while the ceiling of ₹500 crore of loan outstanding for eligibility has been removed “subject to maximum additional ECLGS assistance to each borrower being limited to 40% or ₹200 crore, whichever is lower.”
Eligibility cap
“All players in the civil aviation sector — be it airport operators, scheduled and non-scheduled airlines, air ambulance operators, etc — will get the benefit even if they have outstanding loan of more than ₹500 crore or so on notified date of February 29, 2020,” a senior government official told BusinessLine . However, ‘days past due’ as on February 29, 2020, for such loan should not be more than 60 days.
He also explained that large players in sector such as hospitality, travel and tourism, and leisure and sporting will gain from the removal of eligibility cap. “As many big players in the business of multiplex or hotel industry have taken loans from overseas, besides loan from domestic institutions, they were not eligible on account of the ₹500-crore cap. Now, they will not have any problem and will get guaranteed loan up to ₹200 crore,” he said.
It has also been decided to extend the validity of the scheme to September 30 or till guarantees for an amount of ₹3-lakh crore are issued. Disbursements under the scheme are permitted up to December 31.
Commenting on the changes, Uday Shankar, President, FICCI, took note of the fact that of the ₹3-lakh crore, ₹2.54-lakh crore has been disbursed. “FICCI had requested that the quantum under ECLGS should be doubled to ₹6-lakh crore. We hope the Finance Ministry will keep a close watch on the situation and appropriate enhancements will be made in time, as required,” he said.
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