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The Union Finance Minister has allowed airlines to borrow up to how many crore rupees under the Emergency Credit Line Guarantee Scheme (ECLGS)?
A)
Rs 750 crore
B)
Rs 1,000 crore
C)
Rs 1,500 crore
D)
Rs 2,500 crore

Correct Answer : Option (C) - Rs 1,500 crore


The Union Finance Ministry on Wednesday(5th Oct 2022) allowed airlines to avail of up to Rs 1,500 crore loan under the Emergency Credit Line Guarantee Scheme (ECLGS), to help them tide over their cash flow problems.

Earlier, an airline could avail of a loan of not more than Rs 400 crore under the ECLGS. The Centre had in 2020 started the ECLGS to provide collateral-free and government-guaranteed loans to businesses affected by the Covid pandemic.

The Finance Ministry's decision is likely to benefit financially-beleaguered airlines, such as SpiceJet, which have been looking for the Centre’s assistance to run their operations. Last month, the airline took a loan of approximately Rs 225 crore under ECLGS.

* It is a positive approach for the airlines to secure their working capital and funds for operation.

* The Department of Financial Services has informed that it has enhanced the maximum loan amount eligibility for airlines under the ECLGS to 100 percent of their total credit outstanding.

* The modification in the policy aims to give necessary collateral-free liquidity at reasonable interest rates

* Due to the Covid-19 pandemic, the Aviation sector was affected significantly.

* The halt in domestic and international travel made it more difficult for the airlines to run consistently.

* Amid the Russia-Ukraine war, the prices of Aviation Turbine Fuel (ATF) have shown immense volatility in the past several months.

* The cost of ATF forms around 40 percent of the total operating cost of Airlines impacting their financial viability..

Source : Business Standard

Published On : October 7, 2022
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