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Emergency Credit Line Guarantee Scheme (ECLGS) : Extended Credit

Emergency Credit Line Guarantee Scheme (ECLGS):

The government has extended the Rs. 3-lakh-crore Emergency Credit Line Guarantee Scheme (ECLGS) until 30th June 2021, and also widened its scope to new sectors, including hospitality, travel, and tourism.

  • ECLGS was rolled out in May 2020 as part of the Centre’s Atmanirbhar package in response to the Covid-19 crisis.
  • The objective was to support small businesses struggling to meet their operational liabilities due to the imposition of a nationwide lockdown.

ECLGS 1.0:

  • To provide fully guaranteed and collateral-free additional credit to MSMEs, business enterprises, MUDRA borrowers, and individual loans for business purposes to the extent of 20% of their credit outstanding as of 29th February 2020.
  • MSMEs with up to Rs 25. crore outstanding and Rs. 100 crore turnover were eligible.
  • However, the turnover cap was removed post amendment to ECLGS 2.0 in November 2020.

ECLGS 2.0:

  • The amended version focused on entities in 26 stressed sectors identified by the Kamath Committee along with the healthcare sector with credit outstanding of more than Rs. 50 crore and up to Rs. 500 crore as of 29th February 2020.
  • The scheme also mandated borrower accounts to be less than or equal to 30 days past due as of 29th February 2020, that is, they should not have been classified as SMA 1, SMA 2, or NPA by any of the lenders as of 29th February 2020.
  • SMAs are special mention accounts, which show signs of incipient stress, that lead to the borrower defaulting in servicing the debt.
  • While SMA-0 are accounted having payments partially or wholly overdue for 1-30 days, SMA-1 and SMA-2 accounts have payments overdue for 31-60 days and 61-90 days respectively.
  • The revised scheme also has a five-year repayment window up from four years in ECLGS 1.0.

ECLGS 3.0:

  • It involves extending credit of up to 40% of total credit outstanding across all lending institutions as on 29th February 2020.
  • The tenor of loans granted under ECLGS 3.0 would be 6 years, including a moratorium period of 2 years.
  • Covers business enterprises in Hospitality, Travel & Tourism, Leisure & Sporting sectors,
    Which had, as on 29th February 2020,
  • Total credit outstanding not exceeding Rs. 500 crore and overdue, if any, were for 60 days or less.
  • National Credit Guarantee Trustee Company (NCGTC) is the guarantee provider under the ECLGS scheme.