Rs 3-Trillion Relief Package For MSMEs Operationalized


Government operationalized the Guaranteed Emergency Credit Line (GECL) of Rs 3 trillion which was announced as part of Rs 21 trillion package. The guidelines were issued by the National Credit Guarantee Trustee Company (NCGTC).

GECL is a loan for which 100 per cent guarantee would be provided by National Credit Guarantee Trustee Company to Member Lending Institutions (MLIs) — banks, financial institutions and NBFCs.

The loan will be extended in the form of additional working capital term loan facility in case of banks and additional term loan facility in case of NBFCs to eligible MSMEs/ business enterprises and interested Pradhan Mantri Mudra Yojana (PMMY) borrowers.

The above scheme aims to provide relief to the MSME sector by incentivising lending institutions to provide additional credit of up to Rs 3 trillion at low cost, thereby enabling MSMEs to meet their operational liabilities and restart their businesses.

“This is a pre-approved loan. An offer will go out from the MLI to the eligible borrowers for a pre-approved loan which the borrower may choose to accept. If the MSME accepts the offer, it will be required to complete requisite documentation,” it said.

An ‘opt-out’ option will be provided to eligible borrowers and if a borrower is not interested in availing the loan, he/she may indicate accordingly.

Interest rates under the scheme have been capped at 9.25 per cent for banks and financial institutions, and at 14 per cent for NBFCs. The tenor of loans provided under GECL will be four years and there will be no pre-payment penalty.

Also, a moratorium period of one year on the principal amount will be provided for GECL funding.

Interest shall, however, be payable during the moratorium period. The principal will have to be repaid in 36 instalments after the moratorium period is over.

All MSME borrower accounts with combined outstanding loans across all lending institutions of up to Rs 25 crore as on February 29, 2020, and an annual turnover of up to Rs 100 crore in 2019-20 are eligible to avail the benefit under the scheme.