Published: 19th April 2021
NBFC body seeks inclusion of education in Emergency Credit Line Guarantee Scheme
Noted that the education Sector was excluded from the scope of ECLGS, FIDC said that all the other sectors have been allowed to operate with significant relaxations
The Finance Industry Development Council (FIDC) has urged the government to include the education sector under the Emergency Credit Line Guarantee Scheme (ECLGS). The NBFC body in a letter to Finance Minister Nirmala Sitharaman noted that the business of many NBFCs include education loans to students to finance their higher education expenses in India and abroad and education institution loans (EIL) for financing education infrastructure growth needs of schools, colleges and universities.
Last week, the government had expanded the scope of ECLGS 2.0 and said that Special Mention Accounts-1 (SMA-1) will now be eligible for credit under the scheme. SMA-1 borrowers in the healthcare sector and 26 other high stress sectors as identified by the Kamath Committee are now eligible under ECLGS 2.0. Noted that the education Sector was excluded from the scope of ECLGS, FIDC said that all the other sectors have been allowed to operate with significant relaxations whereas educational institutions are still closed.
"It is a well-established fact that educational institutions have a deep social and economic impact and depriving the sector of adequate and timely support will have serious consequences for the nation as a whole. "We believe that inclusion of education sector under ECLGS will not only provide regular source of funding to educational institutions enabling them to cope up with short term liquidity problem arising out of closure of schools/colleges etc, but also the cash flows would be more aligned to the elongated repayment term," the letter said. The lending institutions would also be able to cover the risk of educational infra loan portfolio and it would provide an enhanced business opportunity as well, it said.