SME Times News Bureau | 19 Apr, 2021
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.
