Budget 2022: Government may extend ECLGS by 1 year beyond March 2022

The government is expected to extend the Emergency Credit Line Guarantee Scheme (ECLGS) in the Budget by one year beyond March 2022. According to sources, the government and public sector banks (PSBs) have also considered debt restructuring for MSMEs.

Under the ECLGS, a total of Rs 3.1 lakh crore has been sanctioned against a Rs 4.5 lakh crore window. On January 7, the same was mentioned as a possible extension.

The administration may approach the RBI about reopening the debt restructuring window for MSMEs.

The Indian Banks’ Association (IBA) has written to the government, requesting help for MSMEs ahead of the budget. It wants an additional 10% loan facility for enterprises already covered by ECLGS, as well as the inclusion of SMA-2 accounts in ECLGS for MSMEs.

It has also requested that the government abolish the outstanding loan/business size cap for MSMEs, allowing all MSMEs, regardless of size, to use ECLGS.