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Finance Ministry expands Scope of ECLGS 2.0, includes Healthcare Sector

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Finance ministry widens scope ofThe Ministry  of Finance has extended the Scope of ECLGS 2.0 component of  Emergency Credit Line Guarantee Scheme (ECLGS) by including SMA-1 (Special Mention Accounts-1)  of the Healthcare sector .

  • ECLGS 2.0 already includes borrowers from 26 sectors identified by RBI (Reserve Bank of India) constituted K V Kamath Committee. It includes sectors like Power, Construction, Textiles, Logistics and others.
  • The revised Operational guidelines are issued by National Credit Guarantee Trustee Company Ltd (NCGTC).
  • Validity Extension of ECLGS – In March, 2021, the Ministry of Finance had extended the validity of ECLGS (ECLGS 1.0, 2.0 & 3.0) by another 3 months till June 30, 2021 or till an amount of INR 3 Lakh crore (Target Credit Line) is reached.Till February 2021, INR 2.46 Lakh crore of 3 Lakh crore were sanctioned under the scheme.

Special Mention Accounts

As per RBI, Special Mention Accounts (SMA) is an account which exhibits signs of growing stress resulting in the borrower defaulting in timely servicing of her/his debt obligations. There are 3 sub-categories of SMA.

Classification

  • SMA-0 – Principal of Interest payment or any other amount wholly or partially over due for 1-30 days.
  • SMA-1 – Principal of Interest payment or any other amount wholly or partially over due for 31-60 days.
  • SMA-2 – Principal of Interest payment or any other amount wholly or partially over due for 61-90 days.

Emergency Credit Line Guarantee Scheme

i.In May 2020, the Union Cabinet  approved ECLGS with an aim to mitigate the economic distress faced by MSMEs during the COVID-19 Pandemic.

ii.Under the scheme, Member Lending Institutions  (MLIs) such as Banks, Financial Institutions and NBFCs (Non-Banking Financial Companies) are given Incentives for providing additional funding facilities to MSME borrowers (in the form of  GECL – Guaranteed Emergency Credit Line).

iii.For this purpose the Government has set a Corpus of INR 41, 600 Crore for the next 4 FYs from 2020-21 to 2023-24.

Components ECLGS 1.0 ECLGS 2.0 ECLGS 3.0
Sectors covered All MSME Borrowers 26 Sectors identified by RBI constituted K V Kamath Committee & now Healthcare sector Hospitality, Travel & Tourism, Leisure & Sporting Sector.
Eligibility

 

Entities with Credit Outstanding of upto INR 25 Crore Entities with credit outstanding of INR 50-500 crore Entities with credit outstanding of upto INR 500 Crore
Eligible Loan Amount  20% of entire outstanding credit 20 %  of their total outstanding credit 40% of total outstanding credit
Loan Repayment period 4-years 5-years 6-years
Moratorium period 1-year 1-year 2-years

Recent Related News:

i.On May 22, 2020, Union Cabinet approved additional funding of up to Rs 3 lakh crore,   collateral-free loan support at a concessional rate of 9.25% through the Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, which has adversely impacted by COVID-19.

About Ministry of Finance:

Union Minister – Nirmala Sitharaman (Rajya Sabha MP representing Karnataka)
Minister of State (MoS) – Anurag Singh Thakur (Lok Sabha MP, Constituency – Hamirpur, Himachal Pradesh)