The Ministry of Finance has extended the Scope of ECLGS 2.0 component of Emergency Credit Line Guarantee Scheme (ECLGS) by including SMA-1 (Special Mention Accounts-1) of the Healthcare sector .
- ECLGS 2.0 already includes borrowers from 26 sectors identified by RBI (Reserve Bank of India) constituted K V Kamath Committee. It includes sectors like Power, Construction, Textiles, Logistics and others.
- The revised Operational guidelines are issued by National Credit Guarantee Trustee Company Ltd (NCGTC).
- Validity Extension of ECLGS – In March, 2021, the Ministry of Finance had extended the validity of ECLGS (ECLGS 1.0, 2.0 & 3.0) by another 3 months till June 30, 2021 or till an amount of INR 3 Lakh crore (Target Credit Line) is reached.Till February 2021, INR 2.46 Lakh crore of 3 Lakh crore were sanctioned under the scheme.
Special Mention Accounts
As per RBI, Special Mention Accounts (SMA) is an account which exhibits signs of growing stress resulting in the borrower defaulting in timely servicing of her/his debt obligations. There are 3 sub-categories of SMA.
Classification
- SMA-0 – Principal of Interest payment or any other amount wholly or partially over due for 1-30 days.
- SMA-1 – Principal of Interest payment or any other amount wholly or partially over due for 31-60 days.
- SMA-2 – Principal of Interest payment or any other amount wholly or partially over due for 61-90 days.
Emergency Credit Line Guarantee Scheme
i.In May 2020, the Union Cabinet approved ECLGS with an aim to mitigate the economic distress faced by MSMEs during the COVID-19 Pandemic.
ii.Under the scheme, Member Lending Institutions (MLIs) such as Banks, Financial Institutions and NBFCs (Non-Banking Financial Companies) are given Incentives for providing additional funding facilities to MSME borrowers (in the form of GECL – Guaranteed Emergency Credit Line).
iii.For this purpose the Government has set a Corpus of INR 41, 600 Crore for the next 4 FYs from 2020-21 to 2023-24.
| Components | ECLGS 1.0 | ECLGS 2.0 | ECLGS 3.0 |
|---|---|---|---|
| Sectors covered | All MSME Borrowers | 26 Sectors identified by RBI constituted K V Kamath Committee & now Healthcare sector | Hospitality, Travel & Tourism, Leisure & Sporting Sector. |
| Eligibility
| Entities with Credit Outstanding of upto INR 25 Crore | Entities with credit outstanding of INR 50-500 crore | Entities with credit outstanding of upto INR 500 Crore |
| Eligible Loan Amount | 20% of entire outstanding credit | 20 % of their total outstanding credit | 40% of total outstanding credit |
| Loan Repayment period | 4-years | 5-years | 6-years |
| Moratorium period | 1-year | 1-year | 2-years |
Recent Related News:
i.On May 22, 2020, Union Cabinet approved additional funding of up to Rs 3 lakh crore, collateral-free loan support at a concessional rate of 9.25% through the Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, which has adversely impacted by COVID-19.
About Ministry of Finance:
Union Minister – Nirmala Sitharaman (Rajya Sabha MP representing Karnataka)
Minister of State (MoS) – Anurag Singh Thakur (Lok Sabha MP, Constituency – Hamirpur, Himachal Pradesh)
