Emergency Credit Line Guarantee Scheme (ECLGS)

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Overview:

The Union government is looking at a possible extension of the Emergency Credit Line Guarantee Scheme (ECLGS) amid global economic uncertainty and expectation of slower domestic growth next fiscal.

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