Emergency Credit Line Guarantee Scheme (ECLGS)

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    • The Department of Financial Services (DFS) has recently modified the Emergency Credit Line Guarantee Scheme (ECLGS) for the aviation sector, raising the scheme’s cheaper loan limit to 1,500 crore from 400 crore to help the sector tide over cash-flow problems.
      • The move is aimed at giving the necessary collateral-free liquidity at reasonable interest rates to the aviation industry. 

    What Is Emergency Credit Line Guarantee Scheme (ECLGS)?

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    • The ECLGS was launched as part of the Rs 20 lakh crore Covid-19 relief package called 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) across India to mitigate the distress caused by the coronavirus-induced lockdown.
    • The loans under ECLGS provide a 100 percent guarantee to lending institutions in respect of the credit facility extended by them under the scheme to eligible borrowers.   

    ECLGS 1.0

    • It had a 1-year moratorium period and a 4-year repayment period.
    • Borrowers could avail of additional credit of up to 20 percent of their overall outstanding credit.

    ECLGS 2.0

    • It was launched by extending the Rs 3 lakh crore schemes to support 26 stressed sectors identified by the Kamath Committee and the healthcare sector.
    • These sectors included power, construction, iron and steel manufacturing, roads, real estate, textiles, chemicals, consumer durables, non-ferrous metals, pharma manufacturing, logistics, gems and jewellery, cement, auto components, hotels-restaurants-tourism, mining, plastic product manufacturing, automobile manufacturing, auto dealerships, aviation, sugar, ports and port services, shipping, building materials, and corporate retail outlets. 
    • The ceiling for outstanding credit was increased from Rs 25 crore to Rs 50 crore under ECLGS 2.0.

    ECLGS 3.0

    • Under ECLGS 3.0, business enterprises in the hospitality, travel and tourism, leisure and sporting sectors would be able to avail credit under the scheme.
    • ECLGS 3.0 involves the extension of 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.

    Source: LM