NBFC body urges FM to include individuals under ECLGS

Source :IANS
Author :IANS
Last Updated: Tue, Jul 7th, 2020, 09:30:18hrs
Nirmala Sitharaman

New Delhi: Finance Industry Development Council (FIDC), the industry body of NBFCs has written to the Finance Minister seeking inclusion of all loans given to individuals for purchase of commercial vehicles under the Emergency Credit Line Guarantee Scheme (ECLGS) announced as the 'Atmanirbhar Bharat' economic package.

In a letter to Finance Minister Nirmala Sitharaman, FIDC noted that more than 75 per cent of the customers take loans for buying vehicles for commercial purposes in their individual names as they don't have any business establishment in the name of firm or partnerships and they conduct their business in individual names.

"We therefore submit for your kind consideration to include all loans given to individuals for purchase of vehicles (including construction equipment vehicles, taxis etc) which are registered for commercial purposes as eligible for assistance under ECLGS," it said.

The letter by FIDC Director General Mahesh Thakkar noted that the industry body has been engaging with National Credit Guarantee Trustee Company (NCGTC) regarding the matter and NCGTC has issued clarifications, but they were limited to loans covered under MUDRA scheme.

"We give lakhs of loans every month ranging from Rs 3-4 lakhs to Rs 25 lakhs for purchase of these assets but most of these loans are not refinanced under MUDRA scheme either on a/c of loan amount as it is over Rs 10 lakhs or the interest spread is higher than mandated to cover the higher operating costs and credit losses," it said.

However, all these loans are disbursed exclusively for purchase of vehicles used for commercial purposes and create employment in the informal sector, FIDC said.

Under ECLGS, 100 per cent sovereign guarantee is provided to all lenders to help them give additional funding to MSMEs and other eligible businesses to the total extent of Rs 3 lakh crore.