Oxygen generation: Finance Ministry enlarges scope of credit scheme for setting up plants

The Emergency Credit Line Guarantee Scheme has been granted a three-month extension and will now be valid till September 30.

The Finance Ministry has enlarged the scope of the ₹3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) to cover loans up to ₹ 2 crore for setting up on-site oxygen generation plants at healthcare facilities and brought in the ailing civil aviation sector under its ambit.

With the capital intensive-aviation sector under the scheme, the government has also dropped the ₹ 500 crore loan outstanding limit for availing emergency credit. The maximum additional assistance to each borrower has, however, been limited to 40% of the outstanding amount, or ₹ 200 crore, whichever is lower.

The ECLGS is a key element of the government’s stimulus and support measures for firms battered by the lockdown restrictions put in place in March 2020 to curb the COVID-19 pandemic. The Ministry attributed the latest changes in the scheme to ‘disruptions caused by the second wave of COVID-19 pandemic to businesses across various sectors’.

The scheme had been granted a further three-month extension and would now be valid till September 30, with disbursals from lenders permitted up to December 31, the Ministry said. However, the scheme’s overall size has been retained at ₹ 3 lakh crore.

“100% guarantee cover to loans up to ₹ 2 crore to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants, interest rate capped at 7.5%,” the Ministry said in a statement. The National Credit Guarantee Trustee Company is expected to issue detailed operational guidelines on the scheme.

Additional credit assistance of up to 10% of outstanding loans as on February 29, 2020, has been granted to existing borrowers under the scheme. The repayment tenure for such borrowers has also been reworked.

Borrowers with an ELCGS loan of four years’ tenure were required to only repay interest during the first 12 months and repay principal with interest in the next 36 months.

Now, they will be able to avail a five years’ loan tenure with only interest repayments to reckon with for the first 24 months.

The original ELCGS provides additional working capital finance for 20% of a borrower’s outstanding credit as on February 29, 2020. The financing is in the form of a term loan at a concessional rate of interest.

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