Emergency Credit Line Guarantee Scheme (ECLGS) – UPSC Prelims

Emergency Credit Line Guarantee Scheme (ECLGS):
  • 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.
ECLGS 1.0:
  • 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.
ECLGS 2.0:
  • 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.
ECLGS 3.0:
  • 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.
Note: The validity of ECLGS that is ECLGS 1.0, ECLGS 2.0 & ECLGS 3.0 has been extended upto 30 June 2021 or till guarantees for an amount of Rs. 3 lakh crore are issued.
About National Credit Guarantee Trustee Company(NCGTC):
  • 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.