Context:
Only 6% of total ₹3.68-lakh crore loans under ECLGS are bad debts
ECLGS:
- Launched as part of – Aatmanirbhar Bharat Abhiyan package announced in May 2020
- Objective – To provide fully guaranteed and collateral free additional credit to MSMEs, business enterprises and MUDRA borrowers that have suffered due to the Covid-19 pandemic
- Functions under – Ministry of Finance, Department of Financial Services (DFS).
- Spearheaded by – National Credit Guarantee Trustee Company Ltd (NCGTC)
- Set up by the Union Ministry of Finance to manage and provide guarantees to these loans.
- Launched in different phases – ECLGS 1.0, ECLGS 2.0, ECLGS 3.0, and ECLGS 4.0.
- In different phases, the scope of this scheme was increased to include multiple sectors.
- Sanctions/disbursements are based on – Assessment of the borrower’s requirements and eligibility.
- Processing charges, foreclosure, and prepayment charges are waived under the scheme.
- No collateral is required for this scheme.
- ECLGS 4.0 – 100% guarantee cover to loans up to Rs.2 crore to hospitals/nursing homes/clinics/medical colleges for setting up on-site oxygen generation plants, interest rate capped at 7.5%
Source: The Hindu Business Line
Previous Year Question
Consider the following statements with reference to India:
1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the ‘medium enterprises’ are those with investments in plant and machinery between Rs. 15 crores and Rs. 25 crores.
2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2023 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (b)
Explanation:
Medium Enterprise: An enterprise where the investment in plant and machinery or equipment does not exceed Rs. 50 crores, and turnover does not exceed Rs. 250 crores. Hence, Statement 1 is not correct.
The areas identified under Priority Sector Lending (PSL) in India by the Reserve Bank of India include agriculture, micro, small and medium enterprises (MSMEs), export credit, education, housing, social infrastructure, renewable energy, and weaker sections of society. Hence, Statement 2 is correct.
