Daily Current Affairs for UPSC
ECLG Scheme extended by the Government
[GS Paper – Banking Sector and NBFCs, GS Paper 2 – Govt. Policies and Interventions]
The government has expanded the scope of its flagship guaranteed loan scheme and extended its validity by a year through March 2023, in sync with the Budget announcements.
The finance ministry has also extended relief under the Rs 5-trillion emergency credit line guarantee scheme (ECLGS) to hospitality, civil aviation and related enterprises.
Key Highlights
- As per the new norms, companies in the hospitality, civil aviation, travel and tourism industry can now borrow up to 50% of their highest fund-based credit outstanding, as against 40% earlier.
- As per the Finance Ministry, the ECLGS 3.0 will be issued without any cash margin to reduce the cost of accessing non-fund based credit, bank guarantees, letters of credit and other non-fund based facilities.
- The extension of the ECLGS validity and the widening of its scope will benefit a wider pool of businesses that haven’t been able to tap the scheme yet, as economic recovery has been dealt a fresh blow by the Omicron spread in January and the current Ukraine crisis.
About ECLG Scheme
- The Emergency Credit Line Guarantee Scheme was launched in May 2020 as part of the Atmanirbhar Bharat Abhiyan Package to mitigate the distress caused by the covid lockdown by providing credit to different sectors, especially MSMEs.
- It aims to provide fully guaranteed and collateral free additional credit to MSMEs, business enterprises, MUDRA borrowers and individual loans for business purposes to the extent of 20% of their credit outstanding as on 29th February, 2020.
- 100% guarantee coverage is being provided by the National Credit Guarantee Trustee Company, whereas Banks and Non Banking Financial Companies (NBFCs) provide loans.
- As per data uploaded by Member Lending Institutions on the ECLGS portal, an amount of Rs. 2.03 lakh crore has been sanctioned under the Scheme to 60.67 lakh borrowers so far, while an amount of Rs. 1.48 lakh crore has been disbursed.
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