EMERGENCY CREDIT LINE GUARANTEE SCHEME (ECLGS) 4.0

WHY IN NEWS ?

• Government has increased the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) for three more months, overviewing the disruptions caused by the second wave of COVID 19 pandemic. Extension will help businesses across several sectors of economy.
  • About ECLGS 4.0
• 100% guarantee cover to be provided on loans, in hospitals/nursing clinics/medical colleges/homes, up to Rs.2 crore. Loan can be utilized to set up on-site oxygen generation plants. Interest rate on loan was capped at 7.5%.
• Additional ECLGS assistance of up to 10% of outstanding by February 2020 to borrowers who are covered under ECLGS 1.0.
• Ceiling of Rs. 500 Cr. of loan outstanding for eligibility under ECLGS 3.0 will be removed. It is subject to maximum additional ECLGS assistance provided to each borrower which is limited to 40% or Rs.200 crore, whichever is lower.
• Civil Aviation sector will be eligible under ECLGS 3.0
• Validity of ECLGS extended to 30.09.2021.

Significance

Modifications in ECLGS will enhance utility and impact of ECLGS by providing additional support to MSMEs. It will safeguard livelihoods and help in resumption of business activity. It will facilitate flow of institutional credit at reasonable terms.

Emergency Credit Line Guarantee Scheme (ECLGS)

ECLGS was launched under Atmanirbhar Bharat Abhiyan package in May 2020. It was launched to overcome the distress caused to the economy due to lockdown. It helped different sectors by providing credit to them. Credit is provided to them for four years besides one year moratorium period on principled repayment