On National Doctor's Day, check KEY HIGHLIGHTS of Loan Guarantee Scheme for COVID Affected Sectors (LGSCAS) to support medical infrastructure

There is some relief for the healthcare sector in the country which faced a huge blow due to the second wave of the COVID-19 pandemic. The Union Cabinet has made several approvals for the sector. This initiative by the central government came a day before the National Doctor's Day on July 1.

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Yesterday, June 30, 2021, the Union Cabinet, chaired by the Prime Minister Narendra Modi has approved Loan Guarantee Scheme for Covid Affected Sectors (LGSCAS) enabling funding to the tune of Rs. 50,000 crore to provide financial guarantee cover for brownfield expansion and greenfield projects related to health/ medical infrastructure.

The Department of Financial Services has also tweeted about the LGSCAS from its official Twitter handle. The tweet reads, "Cabinet approves Loan Guarantee Scheme for Covid Affected Sectors to shore up health infrastructure. Cabinet also approves enhancement of ECLGS to Rs. 4.50 lakh cr. Empowering India to fight COVID-19! "

Cabinet approves Loan Guarantee Scheme for Covid Affected Sectors to shore up health infrastructure. Cabinet also approves enhancement of ECLGS to Rs. 4.50 lakh cr. Empowering India to fight COVID-19! #ECLGS @PMOIndia @FinMinIndia @PIB_India pic.twitter.com/aplN3Z7qEu

— DFS (@DFS_India) June 30, 2021

The key highlights of the scheme for supporting the medical infrastructure are as follows: 

1) Credit guarantee of 50 per cent to all brownfield projects and 75 per cent to all greenfield projects to be set up at the centres other than the metropolitan cities like Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata. Mumbai and Pune

2) For aspirational districts, the guarantee cover for both brownfield expansion and greenfield projects will be 75 per cent

3) This will be applicable to all loans sanctioned up to March 31, 2021, or till guarantees for an amount of Rs 50,000 crore are issued, whichever is earlier

4) Corpus of Rs 2000 crore can be provided by the central government

5) A guarantee loan up to Rs 100 crore per project 

6) Guarantee to be for three years or DCCO to address the construction risk

7) The rate of interest capped at 7.95 per cent to facilitate bank credit at lower rate

8) It can be operated in combination with applicable Interest Subvention Scheme(s) or the PPP-VGF scheme

It has to be noted that the LGSCAS has been formulated as a specific response to an exceptional situation the country has witnessed due to lack of adequate health infrastructure in the light of second wave of Covid-19. The approved scheme is expected to help the country in shoring up its much-needed healthcare infrastructure along with creating more employment opportunities. The main objective of LGSCAS is to partially mitigate credit risk (primarily construction risk) and facilitate bank credit at lower rates of interest.