The scheme has been approved on account of the disruptions caused by the second wave of Covid-19, especially in the healthcare sector.
The Union Cabinet approved the Loan Guarantee Scheme for Covid Affected Sectors (LGSCAS) on Wednesday (June 30), allowing investment of Rs 50,000 crore to offer financial guarantee cover for brownfield and greenfield health and medical infrastructure projects.
The scheme has been approved on account of the disruptions caused by the second wave of Covid-19, especially in the healthcare sector. The Cabinet has also approved the introduction of a scheme for other sectors and lenders, including those allied to better healthcare.
An official release said that detailed modalities would be finalized in due course depending upon the evolving situation.
The Cabinet has also approved additional funding up to Rs 1,50,000 crore under Emergency Credit Line Guarantee Scheme (ECLGS).
ECLGS is a continuing scheme. It would apply to all eligible loans sanctioned under Guaranteed Emergency Credit Line (GECL) till September 30 or till an amount of Rs 4.50 lakh crore is sanctioned, whichever is earlier.
The government has further enlarged the scheme on account of the disruptions caused by the second wave of Covid-19 pandemic to businesses across various sectors of the economy.
The enhancement is expected to provide much-needed relief to various sectors of the economy by motivating lending institutions to provide additional credit of up to Rs 1.5 lakh crore at a low cost to help enterprises meet their operational liabilities and continue their businesses.
The initiative is projected to have a good impact on the economy and boost its resuscitation besides assisting MSMEs to operate in the face of the current unusual scenario.
LGSCAS would apply to all eligible loans sanctioned up to March 31, 2022, or till Rs. 50,000 crores is sanctioned, whichever is earlier.
According to the press release, LGSCAS was created to counter the country’s unusual circumstances caused by a shortage of suitable health infrastructure, including medical oxygen in multiple hospitals in the second wave of Covid-19.
The approved initiative is anticipated to assist the country in bolstering its much-needed healthcare infrastructure while also increasing job possibilities. The primary aim of LGSCAS is to partially mitigate credit risk (primarily construction risk) and facilitate bank credit at lower rates of interest.
