India’s finance ministry modifies ECLGS; raises loan limit to Rs 1,500 crore for aviation sector
NEW DELHI: India’s finance ministry has modified the Emergency Credit Line Guarantee Scheme (ECLGS) by raising loan limit under the scheme to Rs 1,500 crore from Rs 400 crore to help the COVID-hit industry tide over liquidity stress.
Recognising that an efficient and strong civil aviation sector is vital for the economic development of the country, the Department of Financial Services (DFS) has modified the ECLGS on Tuesday to enhance the maximum loan amount eligibility for airlines, an official statement issued on Wednesday said.
As per the modified ECLGS 3.0, an airline would be eligible for “100 per cent of their fund based or non-fund-based loan outstanding as on the reference dates or Rs 1,500 crore, whichever is lower; and of the above, Rs 500 crore shall be considered, based on equity contribution by the owners.”
All other criteria terms and conditions parameters prescribed under the operational guidelines of the ECLGS on August 30, 2022, would be applicable as it is, it said.
The modifications introduced are aimed to give necessary collateral-free liquidity at reasonable interest rates to tide over their present cash flow problems.
Earlier in March 2022, the Emergency Credit Line Guarantee Scheme (ECLGS) was extended beyond March 2022, till March 2023, to implement the announcement made in the Union Budget 2022-23 by Finance Minister Nirmala Sitharaman.
Keeping in view the high proportion of non-fund based credit in the overall credit of the civil aviation sector, the eligible borrowers were permitted to avail up to 50 per cent of their highest total fund and non-fund based credit outstanding, subject to a maximum of Rs 400 crore per borrower, it said.
The ECLGS was announced in May 2020 in wake of the outbreak of COVID-19 to help various sectors, especially in the MSME segment, to get credit at a concessional rate of 7 per cent.
Post announcement, the scheme was modified several times depending on demand of various industries. Besides, the deadline of the scheme was extended several times to support various sectors of the economy that were hit hard due to the outbreak of the pandemic.
On August 17, the Union Cabinet approved the enhancement in the limit of ECLGS by Rs 50,000 crore to Rs 5 lakh crore. The additional amount is being earmarked exclusively for enterprises in hospitality and related sectors including the aviation sector.
Loans worth around Rs 3.67 lakh crore have been sanctioned under ECLGS till August 5, 2022.
Source: Press Trust of India