Emergency Credit Line Guarantee Scheme (ECLGS) – UPSC Prelims

Emergency Credit Line Guarantee Scheme(ECLGS) launched as part of the Covid-19 relief package called the Atma Nirbhar Bharat Abhiyan.

Aim: To provide Rs 3 lakh crore worth of collateral-free, government guaranteed loans to micro, small and medium enterprises(MSMEs) across India. It aimed to mitigate the distress caused by the coronavirus-induced lockdown.

National Credit Guarantee Trustee Company(NCGTC) is the guarantee provider under the ECLGS scheme.

Purpose: It aims to provide fully guaranteed and collateral free additional credit to MSMEs, business enterprises, MUDRA borrowers and individual loans for business purposes. The credit provided to the extent of 20% of their credit outstanding as of 29th February, 2020.

Eligibility: MSMEs with up to Rs 25 crore outstanding and Rs.100 crore turnover were eligible.

Duration: It had a 1-year moratorium period and a 4-year repayment period.

Purpose: It aims to extend the ECLGS Scheme to the 26 stressed sectors identified by the Kamath Committee and the healthcare sector.

Eligibility: Companies with dues of Rs 50-500 crore as of February 29, 2020 were eligible.

Duration: The tenor of the credit under the ECLGS 2.0 was five years including a one-year moratorium.

Under ECLGS 3.0, business enterprises in the hospitality, travel and tourism, leisure and sporting sectors would be able to avail credit.

Extension of Credit: It involves the extension of credit of up to 40% of the total credit outstanding from 20% earlier.

Duration: The tenor of loans granted under ECLGS 3.0 is six years, including a moratorium period of two years.

Eligibility: The scheme will only consider loans less than 60 days overdue as on February 29, 2020, with total credit outstanding not exceeding Rs 500 crore.

NCGTC was set up in 2014 as a private limited company. The Department of Financial Services, Ministry of Finance established it under the Indian Companies Act,1956.

Purpose: To act as a common trustee company to manage and operate various credit guarantee trust funds.