MSME: What is Emergency Credit Line Scheme?
A special loan of Rs 3 lakh crore was announced for MSMEs (Micro, Small and Medium Enterprises) to deal with the impact of Corona crisis on behalf of the government. Under this Rs 3 lakh crore will be given to the MSME eligible borrower
It is known that the Guaranteed Emergency Credit Line (GECLS) of Rs 3 lakh crore was announced under the Rs 20 lakh crore package of Government of India. According to a set of FAQs published by the National Credit Guarantee Trustee Company (NCGTC), GECL is a loan for which 100% guarantee will be provided by National Credit Guarantee Trustee Company to member credit institutions (MLIs). These include banks, financial institutions and NBFC companies in MLI. These loans will be given to eligible MSSE / Commercial Enterprises as an additional term working capital facility. In the case of NBFCs, this loan will be given as an additional term loan facility.
What is the purpose of GECLS?
The GECLS aims to provide financial assistance to MSME firms facing difficulties due to the Corona crisis. Manufacturing and other activities in the MSME sector have been affected due to the Corona crisis. The objective of this scheme is to provide assistance of Rs 3 lakh crore in the form of fully guaranteed emergency loan to mitigate the similar economic crisis faced by MSMEs. Financial institutions will be encouraged to provide low cost loans through GECLS.
What are the main features of the scheme?
– This scheme will also cover loans given under Mudra Yojana till 29th February
– The interest rate of the scheme is 9.25% for banks and financial institutions and 14% for NBFCs. The principal amount should be repaid in 36 instalments after the expiry of EMI
– Loans granted under GECL will be for a period of four years and there will be no penalty for early repayment of loans.
–The loan period is 4 years with a grace period of one year on the principal amount under the scheme.
– MLI will be provided with 100% credit guarantee by NCGTC on the entire amount of GESL offered.
There will be problem in getting loan After the government has announced loans and many other benefits for MSMEs, start-ups and small businesses across the country are fast applying to register themselves as MSMEs on the registration portal, industry base, of the Ministry of MSME are doing. Start-ups and small businesses are doing this to achieve liquidity through loans as well as the rest of the benefits. But experts say that getting a loan is a bit difficult. This new loan has been placed under the category of ‘Additional Working Capital Finance’, for firms that have already received loans and have a turnover of up to Rs 100 crore.
