ECLGS

ECLGS

Subject : Government Schemes

Context : Federation of Indian Small and Medium Enterprises FISME has now called for ECLGS 3.0 with “inbuilt flexibility” to be made available to more firms to deal with the current crisis.

Concept :

• ECLGS was rolled out as part of the Centre’s Aatmanirbhar package in response to the Covid-19 crisis. The objective was to support small businesses struggling to meet their operational liabilities due to the imposition of a nationwide lockdown.
• The ECLGS provides for the Guaranteed Emergency Credit Line (GECL) facility. The GECL is a loan for which 100% guarantee is provided by the National Credit Guarantee Trustee Company (NCGTC) to Member Lending Institutions (MLIs) – banks, financial institutions and Non-Banking Financial Companies (NBFCs).
• The loans are extended in the form of additional working capital term loan facility in case of banks and additional term loan facility in case of NBFCs to eligible MSME enterprises and interested Pradhan Mantri Mudra Yojana (PMMY) borrowers.
• First-time borrowers and Non-Performing Asset (NPA) accounts cannot raise funds under the scheme.
• The tenor of loans provided under the GECL facility is four years from the date of disbursement.
• A moratorium period of one year on the principal amount is provided.
• Interest rates of banks and financial institutions have been capped at 9.25% per annum, while NBFCs can lend at a maximum of 14% per annum.