Banks need to be liberal in lending with extension of ECLGS: KASSIA

Bangalore, Sept 30 (KNN) The Karnataka Small Scale Industries Association (KASSIA) welcomed the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) for another six months till March 2022 by the Centre, stating this will help more embattled MSMEs to cope with the devastating effects of the second wave of the Covid-19 pandemic.

“The Centre has heeded to our plea for extending the ECLGS and therefore we hope that the implementation bottlenecks in lending will also be sorted out,” said KASSIA.

“Many micro and small entrepreneurs continue to face reluctance on the part of the Bankers to lend collateral free loans under ECLGS even though it is incumbent on them to do so, and this reluctance is due to fears of accountability that could fall on them in the near future in case the loan gets bad,” said officials at KASSIA.

They added, “The Finance Minister and the RBI should prevail upon the Banks to lend liberally under the scheme otherwise the purpose for which it was announced will be defeated.”

The Govt yesterday announced the extension of ECLGS timeline till 31.03.2022 or till guarantees for an amount of INR 4.5 lakh crore are issued under the scheme, whichever is earlier, with the aim to support various businesses impacted by the second wave of COVID 19 pandemic.