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Loan Guarantee Scheme for Covid-affected Sectors (LGSCAS)

  • 01 Sep 2021
  • 2 min read

Why in News

Recently, the Finance Minister has asked all stakeholders to conclude Rs 50,000 crore Loan Guarantee Scheme for Covid-Affected Sectors (LGSCAS) in non-metros in time to deal with any future third wave.

  • The LGSCAS scheme is aimed at boosting medical infrastructure in the country, specifically targeting underserved areas.

Key Points

  • About:
    • The scheme was approved by the government in June 2021.
    • Banks would provide loans for building healthcare infrastructure in non-metro cities and smaller towns at a maximum interest rate of 7.95%.
  • Guarantee Coverage:
    • LGSCAS provides a guarantee of 50% for brownfield projects and 75% to greenfield projects for loans sanctioned up to Rs.100 crore, set up at urban or rural locations other than 8 Metropolitan Tier 1 cities (Class X cities).
    • For aspirational districts, the guarantee cover for both brownfield expansion and greenfield projects is 75%.
    • Guarantee duration is up to 3 years.
      • Greenfield describes a completely new project that has to be executed from scratch, while a brownfield project is one that has been worked on by others.
  • Expected Benefits:
    • Will 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.
  • Eligibility:
    • Applicable to all eligible loans sanctioned up to 31st March, 2022 or till an amount of Rs. 50,000 crore is sanctioned, whichever is earlier.

Source: PIB

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