The government of India has enlarged the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) as “ECLGS 4.0” in order to aid businesses across various sectors of the economy, that are hit by the second wave of the Covid-19 pandemic.
*What is Emergency Credit Line Guarantee Scheme?*
The ECLGS, a scheme originally designed for MSMEs, provides 100% guarantee coverage to banks and NBFCs to enable them to provide emergency credit facilities worth Rs 3 lakh crore to eligible borrowers to meet their working capital requirements.
Renamed ECLGS 4.0, the scheme has been extended to hospitals or nursing homes/clinics setting up on-site oxygen generation plants, restructured MSME accounts, civil aviation sector, among others.
*What are the revised changes under ECLGS 4.0?*
Under the revised measures of this scheme, the ceiling of outstanding loans of Rs 500 crore has been removed, but the government has kept the guarantee cover of Rs 3 trillion unchanged.
“ECLGS 4.0 ensures 100% guarantee cover to loans up to Rs.2 crore to hospitals/nursing homes/clinics/medical colleges for setting up on-site oxygen generation plants, interest rate capped at 7.5%,” the Ministry of Finance said in a statement.
Moreover, an additional assistance of up to 10 per cent of the outstanding amount as of February 29, 2020, will be given to borrowers covered under ECLGS 1.0.
The changes are being implemented in sync with restructuring as per RBI guidelines of May 05, 2021.
*Changes made for the borrowers under this scheme*
Borrowers will now be able to avail assistance limited to 40 per cent or Rs 200 crore, whichever is lower.
Those who had availed loans under ECLGS 1.0 for an overall tenure of four years comprising up to 20 per cent of their entire outstanding credit up to Rs 25 crore as of February 29, 2020, will now be able to avail a tenure of five years for their ECLGS loan.
This would mean such borrowers will now get a total of 30 per cent of their entire outstanding loan. Also that they will have to follow the repayment of interest only for the first 24 months with repayment of principal and interest within 36 months.
The validity of the scheme has been extended to September 30 wherein disbursements can be made until December 31.
“The modifications in ECLGS would enhance the utility and impact of ECLGS by providing additional support to MSMEs, safeguarding livelihoods and helping in the seamless resumption of business activity. These changes will further facilitate the flow of institutional credit at reasonable term,” the Ministry of Finance stated in a press release.
Full tweet Text: Govt. expands Emergency Credit Line Guarantee Scheme.
ECLGS 4.0 ensures 100% guarantee cover to loans up to Rs. 2 cr to hospitals/nursing homes/clinics/medical colleges for setting up on-site oxygen generation plants, interest rate capped at 7.5%: @FinMinIndia