Finance Ministry Amends Credit Limits To Airlines Under ECLGS As per reports, this is the second time the government has liberalized the scheme for aviation industry
By Teena Jose
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The government has enhanced the credit limit available to airlines under the emergency credit line guarantee scheme (ECLGS), making the loan amount eligibility for them to 100 per cent of their outstanding debt up to INR 1500 crore, which is subjected to certain conditions. Earlier airlines were eligible to borrow up to 50 per cent of their credit outstanding, around INR 400 crore. As per reports, this is the second time the government has liberalized the scheme for aviation industry.
"On October 4, modified the 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 as on the reference dates for INR 1500 crore, whichever is lower. Of this, INR 500 crore shall be considered, based on equity contribution by the owners. The modifications are aimed to give necessary collateral-free liquidity at reasonable interest rate to tide over their present cash flow problems," said the finance ministry in a statement.
Commenting on this development, Ajay Singh, the chairman and managing director of SpiceJet, in a news report was quoted as saying, "We welcome the government's decision. This will provide a tremendous boost for airlines. I request the government once again for its support for including Aviation Turbine Fuel under GST, which would be a game changer for the entire sector."
"The earlier decision to extend the ECLGS to March 2023 along with the latest announcement for liberalization of the same would go a long way to restore the financial stability of the airlines," said Deepak Sood, secretary general of the associated chambers of commerce and industry of India, in a statement.
