Christ Yoder
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India will expand the scope of a government-guaranteed bailout for small businesses, including raising the threshold to qualify for loans under the program, to help them weather the coronavirus crisis.
Under the current structure of the Emergency Line of Credit Guarantee program, small businesses with turnover up to Rs 100 crore can benefit from an additional 20% of their outstanding loans up to Rs 25 crore at effective February 29. The government will now raise the threshold. loans of Rs 25 crore to Rs 50 crore, according to a statement by Financial Services Secretary Debasish Panda.
This means that the guarantee on loans given to banks by the government will increase from Rs 5 crore (20% of Rs 25 crore) to Rs 10 crore (20% of Rs 50 crore), according to the statement. The turnover limit for small businesses to qualify for such loans has also been increased from Rs 100 crore to Rs 250 crore, in accordance with the amended definition of micro, small and medium enterprises, he said.
As part of this program, the government provides a 100% guarantee to banks on these loans which can be used until October 31. Banks assign a zero percent risk weight to credit facilities granted under this program.
About Rs 1.36 lakh crore was sanctioned by banks under the program on July 29. Of this amount, Rs 87,227 crore was disbursed by banks, Panda said in the statement.
The government will also include loans to individuals for business purposes under the program. The conditions set for the scheme would apply to these loans.
