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Centre may extend deadline to avail Rs 3 lakh crore emergency credit facility

The Central authorities may extend the October 31 deadline to avail the Rs 3 lakh crore emergency working mortgage facility for small enterprises and particular person professionals to assist them tide over the disaster triggered by the Covid-19 pandemic, two officers said.

The authorities has already prolonged its scope by enhancing eligibility standards to embody bigger models and in addition allowed particular person professionals akin to docs, chartered accountants and cab drivers. The proposal to proceed the scheme past October can also be under consideration, the officers with direct information of the matter said requesting anonymity.

The Union Cabinet on May 20, 2020 authorized an Emergency Credit Line Guarantee Scheme (ECLGS) with a corpus of Rs 41,600 crore for about 5 months ending on October 31.The scheme supplies for a straightforward further working capital mortgage at a concessional rate of curiosity to an current borrower who was not a defaulter.

Finance minister Nirmala Sitharaman on Saturday expanded its scope on the request of the trade according to the revised definition of micro, small and medium enterprises (MSMEs) and the cap on funding under the scheme doubled from Rs 5 crore to Rs 10 crore. Besides, industrial models with turnover up to Rs 250 crore (earlier cap was Rs 100 crore), the finance minister prolonged the facility to particular person professional. HT reported it on Sunday.

The National Credit Guarantee Trustee Company Ltd (NCGTC) that issued the operational guideline of ECLGS on June 2, said the curiosity rate under the scheme is capped at 9.25% each year for banks and monetary establishments. For non-banking finance firms (NBFCs), the curiosity rate shouldn’t exceed 14% each year. NCGTC is a wholly-owned company of the Union authorities fashioned in March 2014 to act as a trustee for a number of credit assure funds.

Divakar Vijayasarathy, founder and managing associate at consultancy firm DVS Advisors LLP said, “With most of the states still under various stages of lockdown and vaccine expected by year end, it would definitely make sense for the government to extend the deadline. Once the demand picks up, there would be lot more takers for this scheme.”

In the last two months over Rs 1.36 lakh crore, lower than 50% of Rs 3 lakh crore had been sanctioned by banks and NBFCs and solely Rs 87,227 crore may very well be disbursed under the scheme. The authorities expects about Rs 1 lakh crore mortgage offtake by newly eligible particular person professionals. Still there could be some headroom, which might immediate the federal government to extend the deadline, one of many officers quoted above said.

Kapil Rana, chartered accountant and founding father of HostBooks Ltd, a cloud-based accounting platform said the deadline ought to be prolonged because the pandemic scenario has not utterly normalised and several other individuals haven’t resumed their companies. “Extension of the deadline will benefit the SME’s [small and medium enterprises] who have not yet availed the facilities,” he said.

“The intention of the government was to provide ease in cash flow, however, till now the sanction and disbursement are not up to the expected level,” he said.

Apparel Export Promotion Council (AEPC) chairman A Sakthivel proposed to take away the turnover criterion utterly for exporters. “While turnover of exporters may seem large due to foreign exchange rate fluctuations, the thin margin on which the apparel exporters work and the perishable nature of their products make them vulnerable to any changes in export orders and delay in shipment, which is clearly evident during the ongoing crisis,” he said in an announcement.

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