New Delhi, Jun 30 (FN Bureau) The Union Cabinet on Wednesday approved Loan Guarantee Scheme for Covid Affected Sectors (LGSCAS) and to enhance the corpus of Emergency Credit Line Guarantee Scheme (ECLGS). ”On account of the disruptions caused by the second wave of COVID-19 specially on healthcare sector, the Union Cabinet, chaired by Prime Minister Narendra Modi has approved Loan Guarantee Scheme for Covid Affected Sectors (LGSCAS) enabling funding to the tune of Rs 50,000 crore to provide financial guarantee cover for brownfield expansion and greenfield projects related to health/ medical infrastructure,” an official statement said.
The Cabinet has also approved introduction of a scheme for other sectors/lenders including those allied to better healthcare. Detailed modalities would be finalised in due course depending upon the evolving situation. In addition, the Cabinet has also approved additional funding up to Rs 1,50,000 crore under Emergency Credit Line Guarantee Scheme (ECLGS), the statement said. LGSCAS would be applicable to all eligible loans sanctioned up to March 31, 2022, or till an amount of Rs 50,000 crore is sanctioned, whichever is earlier.
ECLGS is a continuing scheme. The Scheme would be applicable to all eligible loans sanctioned under Guaranteed Emergency Credit Line (GECL) till September 30, 2021, or till an amount of rupees four lakh fifty thousand crore is sanctioned under the GECL, whichever is earlier. The LGSCAS has been formulated as a specific response to an exceptional situation the country has witnessed due to lack of adequate health infrastructure in the light of second wave of Covid-19. The approved scheme is expected to help the country in shoring up its much-needed healthcare infrastructure along with creating more employment opportunities.
The main objective of LGSCAS is to partially mitigate credit risk (primarily construction risk) and facilitate bank credit at lower rates of interest. ECLGS is a continuing scheme and recently, on account of the disruptions caused by the second wave of COVID-19 pandemic to businesses across various sectors of the economy, Government has further enlarged the scope of ECLGS. The enhancement is expected to provide much needed relief to various sectors of the economy by incentivising lending institutions to provide additional credit of up to Rs 1.5 lakh crore at low cost, thereby enabling business enterprises to meet their operational liabilities and continue their businesses. Besides supporting MSMEs to continue functioning during the current unprecedented situation, the Scheme is also expected to have a positive impact on the economy and support its revival, the statement said.