Don't assign risk weight on credit under ECLGS: RBI to lending institutions

The RBI on Sunday said lending institutions should assign zero per cent risk weight on the credit facilities extended under the Emergency Credit Line Guarantee Scheme to MSME borrowers announced by the government in the wake of COVID-19 pandemic.

Mumbai: The RBI on Sunday said lending institutions should assign zero per cent risk weight on the credit facilities extended under the Emergency Credit Line Guarantee Scheme to MSME borrowers announced by the government in the wake of COVID-19 pandemic.

The government in May introduced the Emergency Credit Line Guarantee Scheme (ECLGS) for providing 100 per cent guarantee coverage for additional working capital term loans (in case of banks and financial institutions) and additional term loans (in case of NBFCs) up to 20 per cent of their entire outstanding credit up to Rs 25 crore as on February 29, 2020.

The credit facility is guaranteed by the National Credit Guarantee Trustee Company (NCGTC).