The government has decided to extend the ECLGS scheme to include individual entrepreneurs. This is a move to cover the lag in the economic growth caused due to Pan-India lockdown and the COVID pandemic. Individual entrepreneurs head more than 6.3 crore Micro, Small and Medium Enterprises (MSMEs), and larger companies across India.
Under this scheme, individuals can now avail additional 20% collateral-free loan for the purpose of business. Loans on equipment can also be availed by individuals, including truck drivers, small shopkeepers, taxi drivers, lawyers, agriculture equipment owners, doctors and engineers.
For companies to be eligible for the additional loan, the limits have been increased to outstanding loans with upto Rs 50 crore and annual turnover of upto Rs 250 crore. Thus, now the amount of maximum loan to be availed by an entity is increased to roughly Rs 10 crore from Rs 5 crore previously.
Due to the changes made in the scheme, Rs 1 lakh crore more will be added to the existing sanctioned amount of Rs 1.37 lakh crore by the lending institutions. Government-guaranteed loans of upto Rs 3 lakh crore have been offered by the banks for this scheme.
The per-loan-disbursement by the private banks is almost 5.6 times higher than the state-owned banks. First time borrowers and NPAs are however not allowed to raise the funds under the scheme.
For ECLGS, the interest rates are the following:
|Banks||9.25 % p.a.|
|NBFCs||Maximum upto 14% p.a.|
|Other financial institutions||9.25 % p.a.|
The scheme is open till October 31 or until the fund of Rs 3 lakh crore is sanctioned.
As the pandemic still prevails, further decisions are awaited by the government in support of MSMEs.
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