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DFS Modifies Emergency Credit Line Guarantee Scheme Increases Collateral-Free Liquidity to Aid Aviation Sector Over Cash Constraints

October 6, 2022

In a bid to aid the struggling civil aviation sector, the Department of Financial Services (DFS), Ministry of Finance, has modified the Emergency Credit Line Guarantee Scheme (ECLGS) to enhance the maximum loan amount eligibility for airlines under ECLGS 3.0 to 100% of their fund based or non-fund-based loan outstanding as on the reference dates or Rs. 1,500 crore, whichever is lower. Further, from the above, Rs. 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 will be applicable as it is.

 

As per the Government, the modifications introduced 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% of their highest total fund and non-fund based credit outstanding, subject to a maximum of Rs. 400 crore per borrower.

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