Emergency Credit Line Guarantee Scheme (ECLGS) 4.0

Emergency Credit Line Guarantee Scheme (ECLGS) 4.0

Part of: GS Prelims and GS -III – Economy 

In news

• 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.