General Studies IIIEconomy

Emergency Credit Line Guarantee Scheme (ECLGS)

Ministry of Finance


Cabinet enhance the corpus of Emergency Credit Line Guarantee Scheme (ECLGS)

Key Highlights:

  • The Cabinet has approved additional funding up to Rs. 1,50,000 crore under Emergency Credit Line Guarantee Scheme (ECLGS).
  • The Scheme would be applicable to all eligible loans sanctioned under Guaranteed Emergency Credit Line (GECL)till 30.09.2021, or till an amount of rupees four lakh fifty thousand crore is sanctioned under the GECL, whichever is earlier.
  • lt is a continuing scheme and recently, on account of the disruptions caused by the second wave of COVID 19 pandemic to businesses across various sectors of the economy, Government has further enlarged the scope of ECLGS. The enhancement is expected to provide much needed relief to various sectors of the economy by incentivizing lending institutions to provide additional credit of up to Rs. 1.5 lakh crore at low cost, thereby enabling business enterprises to meet their operational liabilities and continue their businesses. Besides supporting MSMEs to continue functioning during the current unprecedented situation, the Scheme is also expected to have a positive impact on the economy and support its revival.
  • The resurgence of COVID-19 pandemic in India in recent weeks and the associated containment measures adopted at local/regional levels have created new uncertainties and impacted the nascent economic revival that was taking shape. In this environment the most vulnerable category of borrowers are individual borrowers, small businesses and MSMEs, for which, ECLGS, as a targeted policy response was introduced by Gol. The design of ECGLS provides flexibility to quickly respond to emerging needs, as has been evidenced by the introduction of ECLGS 2.0, 3.0 and 4.0 as well as changes announced on 30.05.2021, all of which were within available headroom of Rs 3 lakh crore. Currently, about Rs. 2.6 lakh crore of loans have been sanctioned under ECLGS. A further uptick is expected due to changes announced recently, extension of limit of one time restructuring to Rs. 50 crore by RBI on 04.06.2021 and the continuing adverse impact of COVID on businesses.


  • The Finance Ministry of India launched the Emergency Credit Line Guarantee Scheme (ECLGS) in May 2020 to help the pandemic hit economy.
  • This scheme aimed to provide Rs.3 lakh crore of unsecured loans to MSMEs and business enterprises to mitigate the distress caused by the coronavirus-induced lockdown.
  • In view of the continuing adverse impact of the pandemic, the ECLGS scheme is now extended till June 30, 2021.


  • Apart from providing financial assistance to the MSMEs to address their working capital needs, the ECLGS 3.0 will also be extended to enterprises from the hospitality, travel and tourism, leisure and sporting sectors that were worst hit due to the pandemic.
  • This scheme is available to the mentioned businesses whose total outstanding credit is less than Rs. 500 crore as of February 29, 2020 and whose overdue balance is 60 days or less on that date.
  •  While this ECLGS loans scheme tenor for the credit will be 6 years, which includes 2 years of the moratorium period.
  • The validity of ECLGS 1.0 and 2.0 has been extended till June 30, 2021

Purpose of Emergency Credit Line Guarantee Scheme (ECLGS)

The ECLGS loan was announced as a part of the COVID-19 relief package launched by the Central Government to revive various businesses. Backed by the government, under this scheme, banks and other lending institutions can extend emergency credit facilities to business enterprises and MSMEs that have suffered due to the pandemic. This guaranteed emergency credit line (GECL) can help meet the working capital needs and other operational costs of MSMEs and other stressed businesses.

Under the emergency credit line guarantee scheme, borrowers can avail of term loans that come without collateral.

ECLGS eligibility

Business enterprises/MSMEs including proprietorship, partnership, Limited Liability Partnerships (LLPs) are eligible for the ECLGS scheme. Borrowers with a combined outstanding of Rs.50 crore as on February 29, 2020 and annual turnover up to Rs. 250 crore in FY 2019-20 are eligible. However, under ECLGS 3.0, enterprises from hospitality, travel and tourism, leisure and sporting sectors are also included whose total outstanding credit is less than Rs. 500 crore as of February 29, 2020.

Interest rate and charges

The ECGLS interest rate is nominal and unsecured loans can be availed at the ECLGS loan interest rate of 14 % p. a.

Loan tenor

The tenor for working capital term loans sanctioned under ECLGS scheme 1.0 is 48 months. Loans under ECLGS, ECLGS 2.0 and 3.0 have tenors of 5 and 6 years, respectively. (For the period of 1 year, only interest shall be payable and for subsequent years, principal plus interest shall be payable)

National Credit Guarantee Trustee Company Ltd

  • NCGTC is a private limited company incorporated under the Companies Act, 1956 in 2014, established by the Department of Financial Services, Ministry of Finance, as a wholly owned company of the Government of India, to act as a common trustee company for multiple credit guarantee funds.
    • Credit guarantee programmes are designed to share the lending risk of the lenders and in turn, facilitate access to finance for the prospective borrowers.

Loan Guarantee Scheme for Covid Affected Sectors (LGSCAS)

Source: PIB

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