CREDIT GUARANTEE SCHEME : Free Visas, a guarantor of dwindling Economy?

 Finance Minister Nirmala Sitharaman on Monday announced a credit guarantee scheme worth Rs 1.1 lakh crore for Covid-affected sectors. Addressing a press conference in New Delhi, she also said that Rs 50,000 crore has been allocated for scaling up the health sector.

The Finance Minister then added – “We are announcing about eight economic relief measures, of which four are absolutely new and one is specific to health infrastructure. For Covid-affected areas, Rs 1.1 lakh crore credit guarantee scheme and Rs 50,000 crores for the health sector” she also said – “Loans will be given to the smallest borrowers by micro-finance institutions. A maximum of Rs 1.25 lakh amount to be lent. The focus is on new lending and not on repayment of old loans!”

Union Finance Minister Nirmala Sitharaman said the interest rate under the new credit guarantee scheme is two per cent below the RBI prescribed rate, with a loan duration of three years. The focus will be on new loans and stressed borrowers, with the exception of NPAs (non-performing assets), will be covered under this scheme.

As part of the announcements on Monday, Sitharmanan also announced relief for the tourism sector. Travel agencies, she said, will be able to get a retail loan of Rs 10 lakh while tour guides will be eligible for a loan of Rs 10 lakh. The first five lakh tourists will be provided with visas free of cost, she added.

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