Srinagar, July 23: A large number of borrowers associated with J&K Bank have urged the bank to relax guarantor-related requirements under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, saying the existing condition is preventing genuine businesses from accessing much-needed additional working capital.
Reports said that many traders and industrial units maintaining satisfactory loan accounts with J&K Bank are unable to avail the additional 20 per cent working capital sanctioned under the Central Government-backed ECLGS 5.0 because the guarantors attached to their original loan accounts are no longer available.
The affected borrowers have stated that in several cases the original guarantors have passed away, are suffering from serious illness, have migrated outside Jammu and Kashmir, or are otherwise unable to continue as guarantors due to personal circumstances.
Business representatives have maintained that the issue is procedural rather than financial, asserting that many of the affected borrowers have operational businesses, satisfactory repayment records and genuine working capital requirements. They have appealed to J&K Bank to permit the substitution of fresh third-party guarantors in deserving cases so that eligible borrowers can avail the benefits of the government-backed credit guarantee scheme.
The business community has argued that allowing replacement of unavailable guarantors would not dilute the bank’s credit safeguards, as every request could be examined on its own merits, taking into account the borrower’s repayment history, business viability and the credentials of the proposed guarantor.
Industry representatives have also stressed that delays in the release of working capital could adversely affect business operations, employment and market activity, particularly at a time when enterprises are grappling with economic uncertainty and rising operational costs.
The Central Government had introduced ECLGS 5.0 to provide additional credit support to businesses facing financial stress arising from global economic uncertainties. However, stakeholders in Jammu and Kashmir have urged J&K Bank and the administration to evolve a practical solution to ensure that genuine borrowers are not deprived of the benefits of the scheme due to procedural constraints. [KNT]
