Approval of Credit Guarantee Scheme (LGSCAS) for COVID Affected Areas
Recently, the Union Cabinet has approved the Loan Guarantee Scheme for COVID Affected Sectors (LGSCAS) for the COVID affected areas.
It may be noted that in the month of June, the Finance Ministry had announced several measures to provide relief to various sectors affected by the second wave of the COVID-19pandemic.
Under this, with a total of 17 measures, an amount of Rs6,28,993crore was announced in this economic relief package.
- The Loan Guarantee Scheme for COVID Affected Areas (LGSCAS) aims to create more employment opportunities in the country as well as improve the medical infrastructure. Under this, the underserved areas are to be specifically targeted.
- The main objective is to partially mitigate credit risk (mainly construction risk) and facilitate bank credit at low rates of interest.
- For urban or rural locations, there will be a guarantee cover of 50% for brown-field projects and 75% for greenfieldprojects for loans up to Rs.100
- For aspirational districts, the guarantee cover for both the projects will be 75%. Also, the cabinet has also approved additional funding under the Emergency Credit Line Guarantee Scheme (ECLGS). The total outlay has been increased from Rs3 lakh crore earlier to Rs5 lakh crore.
- This will be applicable to all eligible loans sanctioned under the Guaranteed Emergency Credit Line (GECL) till 30 September
- The Emergency Credit Line Guarantee Scheme (ECLGS) is based on helping the micro, small and medium enterprises (MSMEs) and small businesses affected by the pandemic by providing them collateral-free and government-guaranteed loans.
- Emergency Credit Line Guarantee Scheme (ECLGS), guaranteed emergency credit line (GECL) to eligible Micro, Small and Medium Enterprises (MSMEs) by National Credit Guarantee Trustee Company to member lending institutions (banks, financial institutions and non-banking financial companies) Provides 100% guaranteed coverage.
There are projects where some work has already been done. The workplace is already partially developed with the necessary infrastructure. From then on, new development begins.
A completely new project is called a green field project. The workplace is not developed and the infrastructure required for the project does not normally exist.
Source – The Hindu