Prime Minister Narendra Modi's Rs 3 lakh crore revival support for Micro, Small & Medium Enterprises or MSMEs through Guaranteed Emergency Credit Line (GECL) has gained quick traction among targeted beneficiaries. While the rules for the scheme were notified barely 10 days ago, sources say over 1.5 lakh have already availed of the facility. Asenior finance ministry official said that till Friday for 1.5 lakh successful MSMEs and businesses, the total loan sanctioned stands at approximately Rs 13,500 crore while over Rs 6000 crore has already been disbursed.
So enthused is the government by the response that there is an assessment that the majority of businesses including MSMEs interested in using the opportunity may avail the scheme by the end of June itself. The Guaranteed Emergency Credit Line (GECL) scheme aims to benefit 45 lakh MSMEs and businesses. The scheme is scheduled to stay in operation till October 31 or till an amount of Rs 3 lakh crore is sanctioned under the GECL, whichever is earlier.
The government had announced the scheme as part of the newly-coined slogan Atmanirbhar Bharat Yojna on February 29, 2020. It mandates banks to provide loans up to Rs 3 lakh crore to MSMEs and businesses with Rs 100 crore turnover and Rs 25 crore loan outstanding. The key element of the scheme is the government standing as a guarantor for the MSMEs and business borrowers.
Under the scheme, up to 20 per cent of outstanding is being provided as a new term loan. Compared to 14 per cent cap on interest by NBFCs, the rate has been capped at 9.25 per cent for banks and financial institutions. Public sector banks, on the other hand, have agreed to provide a loan at 7.5 per cent. Read More...
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