NEW DELHI: India Inc has hailed the widening of the Emergency Credit Line Guarantee Scheme (ECLGS) scheme to include the troubled civil aviation sector and provide additional support to small businesses but has also sought higher allocations for the scheme.
The extent of the scheme, first announced in May 2020 to mitigate the financial distress caused by Covid, remains restricted at Rs 3 lakh crore, of which Rs 2.55 lakh crore has already been utilised.
This means that only Rs 45,000 crore will be available for aviation and MSMEs.
“We have requested that the quantum under ECLGS should be doubled to Rs 6 lakh crore. We hope that the appropriate enhancements will be made in time,” FICCI president Uday Shankar said.
CII president Uday Kotak had also urged an increase in the quantum of loans to around Rs 5 lakh crore. Assocham has also sought a doubling of the threshold.
“A minimum Rs 3 lakh crore more should be pumped in to help these stressed units,” said Assocham secretary general Deepak Sood.
Even though the sovereign-backed lending programme has been revised multiple times to include various sectors, the pace of utilisation has been quite low.
“In our coverage, we see regional banks like City Union Bank, Karur Vysya Bank and small private banks like DCB Bank to be key beneficiaries as they have disbursed about 3-5 per cent of loans under this scheme. The impact is lower for PSU banks (1-1.5 per cent of loans),” Kotak Institutional Equities wrote in a note.