On November 2, 2020, Government of India extended Emergency Credit Line Guarantee Scheme (ECLGS) by one month (i.e.) 30th of November or till an amount of INR Three Lakh Crore (Target Credit of ECLGS) is sanctioned under the scheme, whichever is earlier. The previous Deadline was October 31, 2020.
The extension will provide an opportunity for borrowers who have not availed the scheme so far, to obtain credit under the scheme.
It has been extended for opening up various sectors in the economy and for expected increase in demand during the festive season.
i.ECLGS was announced as part of the Atma Nirbhar Bharat Package (ANBP) to provide fully guaranteed and collateral free additional credit to MSMEs, business enterprises, individual loans for business purposes and MUDRA borrowers, it also includes Doctors, Chartered Accountants and self Employed individuals like vendors, Taxi drivers.
ii.ECLGS provides guaranteed and collateral free additional credit to the extent of 20 percent of their Credit outstanding as on 29.2.2020.
iii.The collateral free loan provided under this scheme will support small enterprises to pay salary, rent and restocking expenses.
Meeting of Target:
According to Members Lending Institutions on ECLGS Portal, Loans of INR 2.03 Lakh Crore have been sanctioned and an amount of INR 1.48 Lakh crore has been disbursed. The number of beneficiaries under the scheme are 60.67 lakh borrowers so far.
Prime Minister Narendra Modi appointed a committee headed by Rajnath Singh to solve the difficulties faced in the implementation of Rs.3 Lakh crore collateral-free loan for MSME.
Emergency Credit Line Guarantee Scheme (ECLGS):
i.In May, 2020, Union Cabinet chaired by Prime Minister Narendra Modi approved ECLGS Scheme. The Government of India through the Ministry of Finance, Department of Financial Services introduced ECLGS.
ii.It will provide them 100 percent guarantee for any losses suffered by them due to non-repayment of GECL (Guaranteed Emergency Credit Line) funding by borrowers.
Objective of ECLGS:
The Main objective is providing incentive to Member Lending Institutions (MLIs) such as Banks, Financial Institutions (FIs) and Non-Banking Financial Companies (NBFCs) to increase access, and enable availability of additional funding facilities to MSME Borrowers facing economic distress due to pandemic.
Emergency Credit Line Guarantee Scheme (ECLGS)
|Target Credit||INR 3 Lakh Crore|
|Beneficiaries||MSMEs, Business Enterprises, individual loans for business purposes and MUDRA borrowers, Individual beneficiaries.|
(Borrowers with credit outstanding upto INR 50 crore as on 29.2.2020 with an annual turnover of upto INR 250 crore are eligible )
|Interest Rate||9.25 % – Banks and Financial Institutions|
14 % – Non-Banking Financial Companies (NBFCs)
|Tenure of Loans||4 years (includes moratorium of one year on principle repayment)|
|Corpus of Scheme||INR 41, 600 Crores by Government for the current and the next three financial years .|
|Introduced by||Government of India through Ministry of Finance, Department of Financial Services|
Recent Related News:
i.May 22, 2020, Union Cabinet approved the 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 Micro, Small &
Medium Enterprises (MSME) sector, which has adversely impacted by COVID-19.
About Ministry of Finance:
Union Minister – Nirmala Sitharaman
Minister of State (MoS) – Anurag Singh Thakur