India Announces Emergency Credit Guarantee For More Sectors, Extends Scheme Till June 30
The Indian government announced a new emergency credit line guarantee window to cover more sectors where banks will be able to provide collateral-free loans to borrowers.
Under the new scheme, businesses in the hospitality, travel and tourism, leisure and sporting sectors will be covered, the Ministry of Finance said in a media statement on March 31. The scheme will be applicable for accounts that had past dues up to Rs 500 crore as of Feb. 29, 2020.
The tenor of these fully guaranteed loans will be six years, including a moratorium period of two years, the statement said.
Besides including more sectors, the government has extended the existing emergency credit guarantee scheme till June 30, 2021, or till guarantees worth Rs 3 lakh crore are issued. The finance ministry also said the last day of disbursement under the scheme has been increased to Sept. 30, 2021.
The emergency credit line guarantee scheme for medium and small businesses was launched May last year under the government’s ‘Atmanirbhar’—or self-sufficiency—package to mitigate economic distress from the Covid-19 pandemic and subsequent lockdowns.
The scheme was later expanded in November to include 26 more stressed sectors that were identified by a Reserve Bank of India-constituted panel. Firms that had remained in default for up to 30 days as on Feb. 29, 2020 were allowed to access emergency funding from banks.
The government has now extended the scheme for more sectors that were hit by the Covid-19 pandemic. The modifications in the scheme and providing incentives to enable the availability of additional funding will go a long way in contributing to an economic revival, the Finance Ministry said.