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The finance ministry recently decided to extend the Emergency Credit Line Guarantee Scheme to individuals. It has also allowed loans to larger MSMEs (Micro, Small and Medium Enterprises) and professionals like doctors, lawyers, etc. for business purposes.
The ECLGS was launched in May 2020 as part of the Atmanirbhar package by the Indian Government to tackle the ongoing crisis of Covid-19. The ECLGS provide for the Guaranteed Emergency Credit Line facility.
It is a loan for which a 100% guarantee is given by the National Credit Guarantee Trustee Company. It provides the guarantee to Member Lending Institutions like banks, NBFCs (Non-Banking Financial Companies), and financial institutions.
The loans are extended in the form of additional working capital term loan facility in case of banks and additional term loan facility for NBFCs to eligible MSMEs, business enterprises, and interested Pradhan Mantri Mudra Yojana borrowers.
The scheme was rolled out as a response to the crisis situation caused by Covid-19 across the country. The primary objective of this scheme is to provide relief to the MSME sector by stimulating Member Lending Institutions to provide additional credit of up to 3 lakh crore rupees at a low cost. It will allow MSMEs to meet their operational liabilities and restart their businesses.
The ECLGS has gone through a lot of changes. One among them is that the finance ministry decided to provide this scheme to individuals now. Individuals can avail of this scheme if they already have loans for business purposes and provided that they fulfill the eligibility criteria to avail of the scheme.
Finance Ministry Nirmala Sitharaman said that the extension of the scheme to include individual loans for the purpose of working capital and larger MSMEs might boost credit offtake by 1 trillion rupees within the overall ceiling of 3 trillion rupees for the scheme.
The following eligibility criteria must be fulfilled:
The key highlights of the Emergency Credit Line Guarantee Scheme and the changes made therein are mentioned below.
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