Emergency Credit Line Guarantee Scheme (ECLGS) 4.0
Part of: GS Prelims and GS -III – Economy
- Government has increased the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) for three more months.
- Why was it extended?
- To help businesses across several sectors affected by the second wave of COVID 19.
About ECLGS 4.0
- 100% guarantee cover to be provided on loans, in hospitals/nursing clinics/medical colleges/homes, up to Rs.2 crore.
- Loan can be utilized to set up on-site oxygen generation plants.
- Additional ECLGS assistance up to 10% of outstanding as on February 2020 to borrowers who are covered under ECLGS 1.0.
- Ceiling of Rs. 500 Cr. of loan outstanding is removed. Assistance will be limited to 40% or Rs.200 crore, whichever is lower.
- Civil Aviation sector will be eligible under ECLGS 3.0.
- Validity of ECLGS extended to Sept 30 2021 or till guarantees for ₹3 trillion are issues
Significance of the move
- ECLGS 4.0 will enhance the utility and impact of ECLGS by providing additional support to MSMEs.
- It will safeguard livelihoods.
- It will help in the resumption of business activity.
- It will facilitate flow of institutional credit at reasonable terms.
Important value additions
Emergency Credit Line Guarantee Scheme (ECLGS)
- ECLGS was launched under Atmanirbhar Bharat Abhiyan in May 2020.
- Objective: To overcome the distress caused on economy due to lockdown.
- It helped different sectors by providing credit to them.
- Credit was provided to them for four years besides one year moratorium period on principled repayment.