Get cash in your account within 5-7 days! 35,000 crore loans sanctioned for MSMEs and airlines
Suspense Crime, Digital Desk : Loans worth 35,000 crore have been sanctioned by banks under the Emergency Credit Guarantee Scheme (ECLGS) providing a big relief for micro, small and medium enterprises (MSMEs) and airlines that are suffering from cash crunches caused by the recent war in the West Asia. Sanctioned by the Union Cabinet on May 5, the scheme is intended to support businesses facing immediate liquidity issues. The whole application has been digitized and loans will be disbursed directly into the concerned accounts in about 5 to 7 days.
As on May 29, around 80,000 applications have been sanctioned by banks in India. According to Manoj Muttathil Ayyappan, joint secretary, department of financial services, loans worth 35,194 crore and guarantees of 15,720 crore have been issued so far.
Highlights of ECLGS 5.0 scheme
The scheme proposes 2.55 lakh crore worth of additional loans, with a special package of 5,000 crore given for the airline industry dealing with the global financial stress. The entire scheme's (ECLGS 5.0) outlay is Rs 18,100 crore. Banks can offer an additional loan of up to 20 percent of the already outstanding working capital amount of the businesses.
There will be a 100 percent guarantee cover to MSMEs and a 90 percent cover for non-MSMEs through the National Credit Guarantee Trustee Company Limited (NCGTC).
Who will be benefited and out of this scheme?
The scheme has been further eased so as to benefit various affected industries and there are also outreach programs being conducted throughout the country for the same.
Who will not be benefited by the loan
Customers are eligible to avail loan from the scheme only if they don’t fall into the SMA-2 (Special Mentioned Account) status as on March 31, 2026. The SMA-2 refers to loan accounts in which there is an overdue payment between 60 and up to 90 days for principal or interest.
Repayment tenure and loan terms
The scheme has different repayment tenure and moratorium period for different sectors. For airline sector, there would be 7-year of repayment term from the first disbursement and 2 years of moratorium period. For MSMEs and non-MSMEs, there would be a 5-year of loan tenure with a 1-year of moratorium period from the date of first disbursement.
MSMEs and airline sector have faced a significant cash crunch and liquidity problem due to the West Asia conflict that started in February. This scheme has been brought in to continue operations for these firms, prevent job loss, and encourage domestic production. It may be worth noting that ECLGS was launched in May 2020 in order to ease the cash crunches faced due to the Covid-19 crisis.
