The Union Cabinet approved the enhancement in the limit of the Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 50,000 crore to Rs 5 lakh crore, with the additional amount being earmarked exclusively for enterprises in hospitality and related sectors. ECLGS is a continuing scheme and the additional amount of Rs. 50,000 crore would be made applicable to enterprises in hospitality and related sectors till validity of the scheme in March 31 next year.
The enhancement is expected to provide much-needed relief to enterprises in these sectors by incentivizing lending institutions to provide additional credit of up to Rs 50,000 crore at low cost, enabling these business enterprises to meet their operational liabilities and continue their businesses. Loans of about Rs. 3.67 Lakh crore have been sanctioned under ECLGS till August 5.
An official release said that the pandemic has adversely impacted contact-intensive sectors, especially the hospitality and related sectors more severely. While other sectors were back faster on the path of recovery, demand continued to be subdued for these sectors for a longer period, suggesting the need for suitable interventions for their sustenance and recovery. It was announced in Union Budget 2022-23 to extend the validity of ECLGS up to March, 2023 and increase in the limit of guaranteed cover of ECLGS by Rs 50,000 crore to total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the enterprises in hospitality and related sectors.
It refers to the scheme for providing 100% Guarantee to member lending institutions in respect of eligible credit facility extended by them to its borrowers whose total credit outstanding (fund based only) across all lending institutions and days past due as on February 29, 2020 was upto Rs.50 crore and upto 60 days respectively.