The government has expanded the Emergency Credit Line Guarantee Scheme (ECLGS) to help businesses hit by the second wave of the Covid-19 pandemic.
The scheme removes the ceiling of outstanding loans of Rs 500 crore, but keeps the government’s guarantee cover of Rs three trillion unchanged. Borrowers will be able to avail assistance limited to 40 per cent or Rs 200 crore, whichever is lower.An additional assistance of up to 10 per cent of the outstanding amount as on February 29, 2020 will be given to borrowers covered under ECLGS 1.0, in sync with restructuring as per RBI guidelines of May 05, 2021. Under ECLGS 1.0, borrowers could avail loans up to 20 per cent of their entire outstanding credit up to Rs 25 crore as on February 29, 2020. This would mean such borrowers will now get a total 30 per cent of their entire outstanding loan.
Dubbed as ECLGS 4.0, the scheme has been extended to hospitals or nursing homes/clinics setting up on-site oxygen generation plants, restructured MSME accounts, civil aviation sector, among others. The validity of the scheme has been extended to September 30. Disbursements can be made until December 31.
A guarantee cover for loans up to Rs two crore is being extended to hospitals setting up oxygen generation plants for which the interest rate is capped at 7.5 per cent.
“The modifications in ECLGS, would enhance the utility and impact of ECLGS by providing additional support to MSMEs, safeguarding livelihoods and helping in seamless resumption of business activity. These changes will further facilitate flow of institutional credit at reasonable term,” said a statement from the Finance Ministry.
The scheme will help borrowers eligible for restructuring as per Reserve Bank of India guidelines. It applies to businesses that had availed loans under ECLGS 1.0 of overall tenure of four years consisting of repayment of interest during the first 12 months with repayment of principal and interest in 36 months thereafter. These borrowers will now be able to avail a tenure of five years for repaying the loan loan that involves interest repayment for the first 24 months, and principal and interest in 36 months thereafter. ECLGS 2.0 and ECLGS 3.0 had a loan tenure of five years with a 12-month moratorium on repayment of principal, and 6 years including a moratorium period of 2 years, respectively.
An additional assistance of up to 10 per cent of the outstanding as on February 29, 2020 will be given to borrowers covered under ECLGS 1.0, in sync with restructuring as per RBI guidelines of May 05, 2021.
Under ECLGS 1.0, borrowers could avail loans up to 20 per cent of their entire outstanding credit up to Rs 25 crore as on February 29, 2020. The tenure of loans under the scheme shall be four years, with a moratorium of one year on the principal amount.