Govt to extend Emergency Credit Line Guarantee Scheme

Government of India has allowed loans for larger MSMEs and professionals for business purposes within the ambit of Emergency Credit Line Guarantee Scheme (ECLGS). It has expanded the Emergency Credit Line Guarantee Scheme (ECLGS) to cover loans given to larger firms as well as to self-employed people and professionals who have taken loans for business purposes.

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Key-Points

ECLGS was rolled out in May 2020 as part of the Centre’s Aatmanirbhar package in response to the Covid-19 crisis. The objective was to support small businesses struggling to meet their operational liabilities due to the imposition of a nationwide lockdown.

The ECLGS provides for the Guaranteed Emergency Credit Line (GECL) facility. The GECL is a loan for which 100% guarantee is provided by the National Credit Guarantee Trustee Company (NCGTC) to Member Lending Institutions (MLIs) – banks, financial institutions and Non-Banking Financial Companies (NBFCs).

The loans are extended in the form of additional working capital term loan facility in case of banks and additional term loan facility in case of NBFCs to eligible Micro, Small and Medium Enterprises (MSMEs)/business enterprises and interested Pradhan Mantri Mudra Yojana (PMMY) borrowers.

The Scheme is applicable to all loans sanctioned under the GECL facility during the period from, 23rd May 2020 to 31st October, 2020, or till an amount of Rs. 3 lakh crore is sanctioned under GECL, whichever is earlier.

Till now, a total of around Rs. 1.37 lakh crore has been sanctioned under the scheme by member lending institutions to around 40 lakh accounts, of which around Rs 87,000 crore has been disbursed.