Secured loans will be provided to stressed assets affected by the Covid-19 pandemic from the existing three trillion rupee line of credit allocated to the previous scheme for small businesses.
Operational guidelines for the “guaranteed emergency line of credit” program released on Thursday indicated that the program would be applicable to the 26 sectors, identified by the KV Kamath committee on the resolution framework and the health sector, with arrears of Rs. 50-Rs 500 crore as of February 29, 2020.
The program will be in effect until March 31 or until 3 trillion rupees are sanctioned under the program “taking into account both the Emergency Credit Line Guarantee Program 1.0 and 2.0, whichever comes first “.
“As a result, you must get the guarantee coverage at the earliest, otherwise you risk losing the same if the amount of guarantees issued under the program exceeds the bar of Rs.3 lakh crore”, Frequently Asked Questions by the National Credit Guarantee. Trustee Company, which provides a credit guarantee for the program, said Thursday.
This means that the line of credit for stressed assets would be on the remaining 1 trillion rupees, which can also be used by micro, small and medium enterprises, commercial enterprises and individual loans for business purposes with an outstanding amount of. credit of up to Rs 50 crore. from financial institutions.
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Until November 12, banks have already sanctioned Rs 2.05 trillion to 6.1 million borrowers under ECLGS 1.0.
“Full disbursement of the funds-based facility and the use of at least the first tranche under the non-funds facility is expected to occur by June 30, 2021.
The use of additional tranches under a non-funds facility may occur later during the currency of the collateral “guarantee, according to the guidelines.
Borrowers who have received assistance under ECLGS 1.0 will not be eligible for coverage under the new scheme.
Under this program, borrowers are eligible for total assistance up to 20% of their outstanding credit in all credit institutions as of February 29, 2020. of both. The credit decision as to how much is fund-based and / or how much non-fund-based would be up to microcredit institutions, ”the guidelines said.
The term of the fund-based facility provided under ECLGS 2.0 will be five years from the date of the first disbursement under the fund-based or non-fund-based facility. “No term has been prescribed for the Unfunded Facility, but the guarantee coverage on the Unfunded Facility will expire after a period of five years from the date of the first. disbursement under the funds-based or non-funds-based facility, ”the guidelines stated.
The principal amount shall be repaid in 36 installments after the end of the moratorium period in the case of loans covered by ECLGS 1.0 and in 48 installments after the moratorium period in the case of loans covered by ECLGS 2.0. “There will be no moratorium on installations not based on funds,” the program said.
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Loans under the program will be linked to external benchmarks for MSMEs and the marginal cost-based lending rate for non-MSMEs. “The overall lending rate is capped at 1% above the external benchmark lending rate (for MSMEs) and the marginal cost-based lending rate (for non-MSMEs) or 9.25% per year, whichever is lower. Loans that are not allowed to be compared to external rates will be capped at a maximum of 9.25 percent, ”according to the guidelines. The interest rate of non-bank financial corporations and housing finance companies will be capped at 14%.