The Centre has modified the Emergency Credit Line Guarantee Scheme (ECLGS) to enhance the maximum loan amount eligibility for airlines under ECLGS 3.0 to 100 per cent of their fund based or non-fund based loan outstanding or INR 1,500 crore, whichever is lower; and of the above, INR 500 crore shall be considered, based on equity contribution by the owners.
All other criteria terms and conditions parameters prescribed under the operational guidelines of the ECLGS on 30.8.2022 shall be applicable as it is, Ministry of Finance said in a statement.
Civil Aviation Secretary, Rajiv Bansal last week wrote to the finance ministry, asking that under the scheme, airlines be allowed to avail of additional debt of up to 100% of their outstanding credit, subject to a cap of INR 1,500 crore. Reasoning why an enhanced credit line is important for airlines, Bansal said an unprecedented rise in jet fuel price and devaluation of the rupee against the dollar had increased their operating cost.
The modifications, introduced by Department of Financial services, are aimed to give necessary collateral-free liquidity at reasonable interest rates to tide over their present cash flow problems.Earlier in March 2022, the Emergency Credit Line Guarantee Scheme (ECLGS) was extended beyond March 2022, till March 2023, to implement the announcement made in the Union Budget 2022-23 by Union Minister for Finance & Corporate Affairs Nirmala Sitharaman.
Keeping in view the high proportion of non-fund based credit in the overall credit of the civil aviation sector, the eligible borrowers were permitted to avail up to 50 per cent of their highest total fund and non-fund based credit outstanding, subject to a maximum of INR 400 crore per borrower.
