FM reviews Aatmanirbhar Bharat package, Rs 62k cr disbursed under ECLGS

Finance Minister Nirmala Sitharman has reviewed the progress of the Aatmanirbhar Bharat economic package's implementation in matters related to the Finance and Corporate Affair Ministries.

The latest review has shown that as of July 9, banks have disbursed Rs 61,987.90 crore to MSMEs under the Emergency Credit Line Guarantee Scheme (ECLGS). A total of over Rs 1.20 lakh crore have been sanctioned so far.

To provide relief to the businesses, additional working capital finance of 20 per cent of the outstanding credit as on February 29, 2020, in the form of a term loan at a concessional rate of interest is provided under the scheme. This would be available to units with upto Rs 25 crore outstanding and turnover of up to Rs 100 crore whose accounts are standard.

The units will not have to provide any guarantee or collateral of their own. The amount will be 100 per cent guaranteed by the government of India providing a total liquidity of Rs 3 lakh crore to more than 45 lakh MSMEs.

Regarding the Rs 45,000 crore Partial Credit Guarantee Scheme 2.0 for non-banking financial companies (NBFCs), the Finance Ministry statement said that banks have approved purchase of portfolio of Rs 14,000 crore and are currently in process of approval or negotiations for Rs 6,000 crore as on July 3, 2020.

As per the Aatmanirbhar Bharat package, the government had announced to revamp the existing Partial Credit Guarantee Scheme (PCGS) and extend it to cover the borrowings of lower rated NBFCs, HFCs and other Micro Finance Institutions (MFIs). Government of India would provide a 20 per cent first loss sovereign guarantee to public sector banks.

Further, NABARD has sanctioned the new front loaded special refinance facility of Rs 30,000 crore sanctioned to regional rural banks and Cooperative Banks. This special facility to benefit three crore farmers,  consisting of mostly small and marginal farmers in meeting their credit needs for post-harvest and kharif sowing requirements.

The statement said that when kharif sowing is already on its full swing Rs 24,876.87 crore out of Rs 30,000 crore has been disbursed as on July 6, out of this special facility.

Sitharaman had announced a Rs 30,000 crore Additional Emergency Working Capital Funding for farmers through NABARD under the package.

On the Rs 30,000 crore Special Liquidity Scheme for NBFCs, HFCs and MFIs, the official statement said that SBICAP has received 24 applications requesting about Rs 9,875 crore of financing as on July 7, 2020 which are being processed. The first application in this regard has received its approval and the remaining are also being considered, it added.

It also said that the Ministry of Corporate Affairs has raised the threshold of default under Section 4 of the IBC, 2016 to Rs 1 crore -- from the existing threshold of Rs 1 lakh. The Ministry of Corporate Affairs is finalising a special insolvency resolution under section 240A of the Code, to provide relief to the MSMEs and the same would be notified soon.

Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 has been promulgated on June 5, 2020 thereby provided for insertion of Section 10A in the Insolvency and Bankruptcy Code 2016 to temporarily suspend initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7, 9 & 10 of the Code for a period of six months or such further period, not exceeding one year from such date.