The government has announced an Emergency Credit Line Guarantee Scheme, to mitigate the stress caused by the Covid-19 pandemic on several sectors.
Emergency Credit Line Guarantee Scheme
- The ECLGS aims to provide 100 percent guaranteed coverage to the banks, non-banking financial institutions (NBFCs), and other lending institutions.
- The scheme has been started in different gradients namely: ECLGS 1.0, ECLGS 2.0, and ECLGS 3.0.
- Significance: The scheme is started to extend emergency credit to business entities that have suffered because of the due Covid-19 pandemic and are struggling to meet the working capital requirements.
Stages of ECLGS
- The ECLGS was launched as a part of the Rs 20 lakh crore Covid-19 relief package under the Aatmanirbhar Bharat Abhiyan.
- The scheme aimed to provide Rs 3 lakh crore worth of collateral-free, government-guaranteed loans to micro, small and medium enterprises (MSMEs).
- ECLGS 2.0 was launched by extending the Rs 3 lakh crore scheme to support 26 stressed sectors identified by the Kamath Committee and the healthcare sector.
- The tenor of the credit under ECLGS 2.0 was five years, including a one-year moratorium.
- The ceiling for outstanding credit was increased from Rs 25 crore to Rs 50 crore under ECLGS 2.0.
- ECLGS 3.0 was announced to extend the Rs 3 lakh crore scheme to support the Hospitality, Travel and Tourism, Leisure, and Sporting sectors.
- ECLGS 3.0 extended the credit of up to 40 percent of the total credit outstanding across all lending institutions from 20 percent earlier.
- The tenor of loans granted under ECLGS 3.0 is six years, including a moratorium period of two years.