Raise outstanding loan limit for ECLGS benefit, AEPC to FM
Tuesday - June 30, 2020 8:27 pm , Category : BUSINESS
New Delhi, June 30 (IANS) The Apparel Export Promotion Council (AEPC) on Tuesday suggested that the Centre should raise the limit of all outstanding loans of MSMEs to Rs 100 crore instead of the current Rs 25 crore for being eligible for the Emergency Credit Line Guarantee Scheme (ECLGS)."Borrowers with outstanding loans of up to Rs 100 crore should be considered for this ECLGS scheme," AEPC Chairman A. Sakthivel wrote in a letter to Finance Minister Nirmala Sitharaman.AEPC said that similar letters have been sent to the MSME Minister Nitin Gadkari and Textiles Minister Smriti Irani requesting them for initiating the amendment.The industry body also requested the government to make necessary amendments in the eligibility criteria for ECLGS based on the new definition of MSMEs so as to extend the credit benefit to all MSME exporters regardless of their turnover."The eligibility criteria for applying for the ECLGS scheme may be amended with no annual turnover for exporters," Sakthivel said.The ECLGS scheme aims to provide 100 per cent guarantee coverage for the Guaranteed Emergency Credit Line (GECL), which is a pre-approved sanction limit of up to 20 per cent of loan outstanding as on February 29, 2020 to eligible borrowers.These loans can be additional working capital term loan facility, in case of banks and financial institutions, and additional term loan facility in case of NBFCs from all member lending institutions (MLIs) to eligible enterprises or MSME borrowers in view of the Covid-19 crisis.In the operational guidelines of ECLGS, it is mentioned that all business enterprises or MSME borrower accounts with combined outstanding loans across all MLIs of up to Rs 25 crore as on February 29, 2020, and annual turnover of up to Rs 100 crore for FY 2019-20 are eligible."However, the MSME Ministry through its notification dated June 26, 2020 has clarified that while investment limit for an MSME is Rs 50 crore, exports of goods or services will be excluded while calculating its turnover. This relaxation should also be reflected in the criteria for applying for ECLGS," Sakthivel said.Accordingly, the annual turnover criteria of up to Rs 100 crore for FY 2019-20 may be removed, especially for apparel exporters, he added.The AEPC chairman said that the apparel industry will be deeply obliged for her intervention as these measures will help in mitigating the suffering of the industry and the millions of workers.