Emergency Credit Line Guarantee Scheme (ECLGS)

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About Emergency Credit Line Guarantee Scheme (ECLGS):

It was launched by the Government of India in 2020 as a special scheme in view of the Covid-19 crisis.
Objective: To provide 100 percent guaranteed coverage to the banks, non-banking financial institutions (NBFCs), and other lending institutions to extend emergency credit to business entities that have suffered due to the Covid-19 pandemic and are struggling to meet their working capital requirements.
ECLGS is under the operational domain of the Ministry of Finance, Department of Financial Services (DFS).
National Credit Guarantee Trustee Company Ltd (NCGTC) has been set up by the Union Ministry of Finance to manage and provide guarantees to these loans.
ECLGS was launched in different phases – ECLGS 1.0, ECLGS 2.0, ECLGS 3.0, and ECLGS 4.0. In different phases, the scope of this scheme was increased to include multiple sectors.
Sanctions/disbursements are made by lending institutions based on assessment of the borrower’s requirements and eligibility.
Processing charges, foreclosure, and prepayment charges are waived under the scheme.
No collateral is required for this scheme.
ECLGS 1.0:
- Under the scheme, borrowers could avail of additional credit of up to 20 percent of their overall outstanding credit as on February 29, 2020.
- Eligibility: Business Enterprises/MSMEs with outstanding loans of up to Rs 25 crore as of February 29, 2020, with an annual turnover cap of Rs 100 crore for the financial year 2019-2020.

Q1) What is the National Credit Guarantee Trustee Company Ltd (NCGTC) ?

NCGTC is a Union Government Company. It’s a private company and is classified as a company limited by shares’. It is majorly in Finance business and currently, company operations are active.Company is registered in Delhi (Delhi) Registrar Office.

Source: Centre mulls possible extension of ECLGS