One in each six loans disbursed below the Emergency Credit score Line Assure Scheme (ECLG Scheme) launched through the Covid-19 pandemic has turned dangerous within the final 27 months. Nearly all of these loans are decrease than Rs 20 lakh, a report by Indian Specific (IE) said.
The Nationwide Credit score Assure Trustee Firm Ltd (NCGTC) declared that 1.6 million accounts or 16.4 per cent of the whole 9.8 million loans disbursed have became non-performing property (NPAs), the report said. NCGTC was set as much as handle these loans.
In Could 2020, the federal government introduced the ECLG scheme. A two-year moratorium was allowed for the loans below ECLG. For NBFCs, the rate of interest was capped at 14 per cent. The rate of interest for different entities was mounted at 9.25 per cent. In the event that they remained unpaid after the moratorium, the loans had been to be declared as NPAs.
Nevertheless, IE quoted a banker as saying that if one mortgage account of a buyer turns dangerous, all of the loans of the account holder are declared as NPA.
Loans below the ECLG Scheme are assured by the federal government and 75 per cent of the mortgage quantity is paid to the financial institution by the federal government instantly if the accounts turn into NPAs. If the cash will not be recovered, the federal government pays the 25 per cent to the financial institution.
A report by the State Financial institution of India (SBI) launched in January stated that the ECLGS was essential to maintain MSMEs afloat.
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