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PHD Chamber suggests govt to extend ECLGS scheme to March 31st, 2022

Updated: May 06, 2021 11:38:40am
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PHD Chamber suggests govt to extend ECLGS scheme to March 31st, 2022

New Delhi, May 5 (KNN) Appreciating the RBI measures for Micro, Small and Medium Enterprises (MSMEs), PHD Chamber of Commerce and Industry has suggested the government to extend the ECLGS scheme to March 31st, 2022. 

In a statement on Wednesday, Sanjay Aggarwal, President, PHD Chamber, said, ''Extend ECLGS scheme to 31st March 2022 with an increase in the amount from Rs 3 lakh crore to Rs 6 lakh Crore along with increase in limit of ECLGS credit from 20 to 40 per cent of the total of fund and non-fund limit availed by the company as of February 29th, 2020 for all the sectors.''  

Commenting on the RBI measures, announced on Wednesday, he said that the calibrated, sequenced and well–timed measures announced by RBI are highly encouraging as these measures will provide liquidity, bring down cost of capital and mitigate the daunting impact of the second wave of pandemic COVID-19. 

''These measures will support the small businesses, individual borrowers and the healthcare system in the country,'' he added.

The facility of on-tap liquidity window of Rs 50,000 crore with upto 3 year tenor at repo rate until March 31, 2022 is highly encouraging as it will help in ramping up of COVID related healthcare infrastructure and supporting wide range of entities including vaccine manufacturers; importers/suppliers of vaccines and priority medical devices; hospitals/dispensaries; pathology labs; manufactures and suppliers of oxygen and ventilators; importers of vaccines and COVID related drugs; logistics firms and also patients for treatment, said Aggarwal

He also said that incentivising the banks for quick delivery of credit through extension of priority sector classification to such lending up to March 31, 2022 and by giving banks an option to park money equal to COVID loan book with RBI at 40 bps above reverse repo rate would go a long way to build a state-of-the-art health infrastructure at this juncture which is very crucial to help masses with adequate health care facilities.

''Announcement of targeted long-term repo operation for small finance banks of Rs 10,000 crore, which can be used for lending of up to Rs 10 lakh per borrower, is a great calibrated step which will support small business units, micro and small industries, and other unorganised sector entities to tide over the impact of pandemic COVID-19,'' he asserted.

Measures such as permitting Small Finance Banks to reckon fresh lending to smaller Micro Finance Institutions, with asset size of up to Rs 500 crore, for on-lending to individual borrowers as priority sector lending; providing extension to banks to deduct credit disbursed to new MSME borrowers from their net demand and time liabilities for calculation of the cash reserve ratio till December 31, 2021; eligibility to standard borrowers under Resolution Framework 2.0; one time measure to review working capital sanctioned limits in respect of small businesses and MSMEs restructured earlier; among others, are highly appreciable measures which will support the most vulnerable category of borrowers including individual borrowers, small businesses and MSMEs, said Aggarwal.

''The steps undertaken by RBI have potential to boost liquidity in the system, mitigate the impact of COVID-19 on vulnerable segments of borrowers and stabilize the macroeconomic environment in the country, going forward,'' he concluded.

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