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Expansion of Emergency Credit Line Guarantee Scheme

  • Integrity Education, Delhi
  • 22, Jun 2021
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Context: Covid-19 relief to various sectors of Economy

  • The scheme was launched as part of the AtmaNirbhar Bharat Abhiyan package announced in May 2020 to mitigate the distress caused by coronavirus-induced lockdown, by providing credit to different sectors, especially Micro, Small and Medium Enterprises (MSMEs).
  • 100% guarantee coverage is being provided by the National Credit Guarantee Trustee Company, whereas Banks and Non Banking Financial Companies (NBFCs) provide loans.
  • The credit will be provided in the form of a Guaranteed Emergency Credit Line (GECL) facility.
  • No Guarantee Fee shall be charged by NCGTC from the Member Lending Institutions (MLIs) under the Scheme.
  • Interest rates under the Scheme shall be capped at 9.25% for banks and FIs, and at 14% for NBFCs
  • ECLGS 1.0: To provide fully guaranteed and collateral free additional credit to MSMEs, business enterprises, MUDRA borrowers and individual loans for business purposes 
  • ECLGS 2.0: Focused on entities in 26 stressed sectors identified by the Kamath Committee along with the healthcare sector 
  • ECLGS 3.0: Covers business enterprises in Hospitality, Travel & Tourism, Leisure & Sporting sectors
  • ECLGS 4.0: 100% guarantee cover to loans up to Rs.2 crore to hospitals/nursing homes/clinics/medical colleges for setting up on-site oxygen generation plants, interest rate capped at 7.5%;

About National Credit Guarantee Trustee Company

  • NCGTC was incorporated under the Indian Companies Act, 1956 on March 28, 2014 by the Department of Financial Services, Ministry of Finance
  • Purpose: To act as a common trustee company to manage and operate various credit guarantee trust funds

Current Trust Funds under the trusteeship management of NCGTC:

  • Credit Guarantee Fund for Skill Development 
  • Credit Guarantee Fund for  Education loans 
  • Credit Guarantee Fund for Factoring   
  • Credit Guarantee Fund for  Micro Units