Updated: Oct 4
Emergency Credit Line Guarantee Scheme (ECLGS)
As a part of the Economic package announced by the finance ministry, The Emergency Credit Line Guarantee Scheme (ECLGS) was launched to aid Micro, Small and Medium Enterprises (MSMEs) & business enterprise in view of the economic distress caused by the COVID-19 pandemic. The scheme aims at providing liquidity in the hands of small business owners so that economic activity can be resumed. The key highlights of the scheme are as follows:
It is a fund based working capital term loan to be provided by Banks and NBFC’s registered with RBI
MSME borrowers with outstanding loans of up to Rs. 25 crore as on 29.2.2020, and annual turnover of up to Rs. 250 crore for FY 2019-20 are eligible for the Scheme.
Business Enterprises / MSMEs constituted as Proprietorship, Partnership, registered company, trusts and Limited Liability Partnerships (LLPs) shall be eligible under the Scheme.
Loans provided in individual capacity are also covered under the Scheme.
A separate loan account shall be opened for the borrower for extending additional credit under this scheme. This account will be distinct from the existing loan account(s) of the borrower.
This is a pre-approved loan. An offer will go out to the eligible borrowers for a preapproved loan which the borrower may choose to accept. If the MSME accepts the offer, it will be required to complete requisite documentation. Thus, an ‘opt-out’ option will be provided to eligible borrowers under the Scheme, i.e., if the borrower is not interested in availing the loan, he/she may indicate accordingly.
The Scheme is valid only for existing customers .
Number of Outstanding EMI’s for the existing loan should not be more than 60 days as on 29th February, 2020 in order to be eligible under the Scheme.
Maximum loan is capped at 20% of the borrower's total outstanding credit up to Rs. 25 crores, subject to the borrower meeting all the eligibility criteria. The maximum loan amount is Rs. 5 cr.
The entire funding provided under the scheme shall be provided with a 100% Government credit guarantee coverage
Repayment should be done in maximum 4 years from the date of disbursement
Moratorium period of one year on the principal amount is applicable. Interest shall, however, be payable during the moratorium period.
The principal shall be repaid in 36 equal instalments after the moratorium period is over.
Interest to be serviced as and when applied.
The scheme is valid till 31.10.2020 or till an amount of Rs 3,00,000 crore is sanctioned under the Scheme by all banks/NBFCs (as notified by NCGTC), whichever is earlier
The interest rate to be charged under the scheme is capped at 9.25% for lending Banks and 14% for NBFC’s