Doctors, CAs, and Lawyers now eligible for loans under the relaxed MSME Loan Scheme

The Government of India under the Atmanirbhar Bharat Abhiyan on Saturday announced the expansion of its flagship loan guarantee scheme for micro, small and medium enterprises (MSMEs) to provide loans to professionals and businesses facing the brunt of Covid19. Professionals including doctors, lawyers, chartered accountants as well as business firms can avail this lending facility for working capital. This ambit extension comes under the Emergency Credit Line Guarantee Scheme (ECLGS) which was launched in May this year as an economic stimulus package.The Rs 3 lakh crore loan guarantee scheme was announced as part of the Atmanirbhar package to provide liquidity support to MSMEs. Under the scheme, the Government provides a full loan guarantee to the incremental loans given to borrowers. As per the Ministry, the ceiling of outstanding loans on borrowers’ accounts has increased to Rs 50 crores from Rs 25 crores. They will be now eligible for a loan facility of up to 20 percent besides their additional outstanding. Moreover, the annual turnover ceiling has been raised to Rs 250 crore from Rs 100 crore in line with the revised definition of MSMEs. Since the inception of the scheme, quantum of as much as Rs 1.36 lakh crore has been sanctioned so far out of which Rs 87,227 crore has been disbursed as stated by the Finance Minister, Nirmala Sitharaman. The update implies that the maximum loan amount a unit can avail will be Rs 10 crores as against the earlier Rs 5 crores limit. Mr. Debashish Panda also expressed hope that other government-run schemes for stressed MSMEs should commence from Monday with all the needed approvals.

Speaking on the effect and implementation of other schemes, Mr. Panda said that as many as 1.12 crore farmers have been given the Kisan Credit Cards (KCC), with a cumulative sanctioned limit of Rs 90,000 crores of credit for disbursement. Farmers taking loans on this card are also eligible for a cover under the crop insurance scheme. For these farmers, there is no requirement of any collateral to be provided against the loan if the same does not exceed Rs 1.6 lakhs. However, this holds true for the loans only taken with the State Bank of India. To boost liquidity for non-banking financial companies (NBFCs), the Secretary stated that the total purchases of NBFC assets and debt under the Rs 45,000-crore partial credit guarantee scheme have reached Rs 18,000 crore.

“The relaxation was made, keeping in view the success of the scheme and its potential to help businesses”, said Sitharaman. On the issue of whether the GST Council will be allowed to borrow funds for distribution to States to fight the pandemic, Sitharaman stated that the opinion of the Attorney General has been sought on this question which is expected to be placed before the next meeting of the council, the date for which is not yet finalized. The ECLGS, distribution of KCC, and liquidity for NBFCs formed a crucial part of the government’s 21-lakh-crore relief package (up to May) to help individuals and businesses suffering from the adverse effects of the Covid-19 pandemic.