Finance Minister Nirmala Sitharaman in her fourth Union Budget expanded the Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 50,000 crore to a total of Rs 5 lakh crore.
The ECLGS was launched by the government as part of its Rs 20 lakh crore comprehensive package, which was announced by the Finance Ministry on May 13, 2020.
What is the ECLGS scheme?
It is short for Emergency Credit Line Guarantee Scheme. It was launched by the government in May 2020 following the outbreak of the pandemic to provide relief to micro, small and mid sized firms hit the hardest by the pandemic. This scheme was part of the Rs 20 lakh crore called the Atmanirbhar Bharat Abhiyaan for COVID relief.
How does the ECLGS scheme work?
Under the scheme, borrowers could avail additional credit of up to 20 percent of their overall outstanding credit as on February 29, 2020. The loans were collateral free and fully guaranteed credit form firms with an outstanding credit 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. The ECLGS initially had a repayment period of four years.
Later, the limits were revised. Outstanding credit was increased from Rs 25 crore to Rs 50 crore. Also, the annual turnover amount was raised to Rs 250 crore from Rs 100 crore. A condition for availing this loan was that the account should not be 60 days past its due as of 29th February, 2020.
The credit scheme was also available for individual borrowers if the loan was availed for their own business and for borrowers under the Pradhan Mantri Mudra Yojana (PMMY).
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(Edited by : Priyanka Deshpande)
First Published: Feb 1, 2022 11:55 AM IST
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