Emergency Credit Line Guarantee Scheme (ECLGS) extended
Part of: Prelims and GS II – Policies and interventions
Context The government has extended the Rs. 4.5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) till March 31, 2022, to help businesses cope with the pandemic’s adverse effects.
What is Emergency Credit Line Guarantee Scheme (ECLGS)?
- Launched by Government of India as a special scheme in view of COVID-19 crisis
- Objective: To provide 100% guarantee coverage to Banks and NBFCs to enable them to extend emergency credit facilities to Business Enterprises / MSMEs in view of COVID-19 to meet their additional term loan/additional working capital requirements.
- The amount of Emergency Credit line to be extended to Business Enterprises / MSMEs would be upto 20% of total outstanding as on Feb 29,2020.
- 100% Guarantee Coverage for the additional funds sanctioned under the Emergency Credit Line Scheme.
- Eligible borrowers: Business Enterprises / MSMEs with outstanding loan of upto Rs.50 crore as on February 29, 2020 and turnover of upto Rs.250 crore in FY 2019-20.
- Interest rate: Interest rate charged is capped at 9.25% for banks and 14% for NBFCs.
- No charges or Guarantee fees.