The finance ministry has called a meeting of heads of public sector banks and the top four private sector lenders to review the progress of the emergency credit line guarantee scheme (ECLGS) to help businesses affected by COVID-19.

The Union Budget 2022-23 announced the extension validity of the scheme up to March 2023 and an increase in the limit of guaranteed cover of ECLGS by Rs 50,000 crore to a total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the enterprises in hospitality and related sectors.

Finance Minister Nirmala Sitharaman in the latest Budget said, “Last year, I proposed revamping scheme will take effect from 1st April 2023 through the infusion of Rs 9,000 crore in the corpus. This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the cost of the credit will be reduced by about 1 percent.”

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ECLGS is a part of the Atmanirbhar Bharat Package

ECLGS was announced as part of the Atmanirbhar Bharat Package in May 2020 with the objective to help businesses including MSMEs to meet there to help businesses including MSMEs to meet their operational liabilities and resume business in view of the distress caused by the COVID-19 crisis, suffered by them due to non-repayment of the funding by borrowers.

The overall ceiling initially announced for ECLGS was Rs 3 lakh crore which was subsequently enhanced to Rs 4.5 lakh crore.

The meeting is scheduled to be held on February 22 to review progress on ECLGS and Loan Guarantee Scheme for COVID-Affected Sectors (LGSCAS).

The meeting, to be chaired by Financial Services Secretary Vivek Joshi, would also see participation from top private sector lenders HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank.

Extension of ECLGS and LGSCAS beyond March 31 as well as challenges related to these would be deliberated.

Sources PTI