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Emergency Credit Line Guarantee Scheme (ECLGS)

  • IAS NEXT, Lucknow
  • 10, Jan 2022
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According to the SBI Research report on ECLGS:

The scheme has saved 13.5 lakh firms from going bankrupt and consequently 1.5 crore jobs.

In absolute terms, MSME loan accounts worth Rs 1.8 lakh crore were saved.

Almost 93.7 per cent of such accounts are in the micro and small category.

Amongst the states, Gujarat has been the biggest beneficiary, followed by Maharashtra, Tamil Nadu and Uttar Pradesh.

About the scheme:

The scheme was launched as part of the Aatmanirbhar 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.


In August 2020, the scheme was extended to Mudra borrowers and Individual loans for business purposes.

On Nov 20, the scheme was extended through ECLGS 2.0 for 26 sectors identified by the Kamath Committee and for the Health Care sector up to Mar 21, for entities with outstanding credit of above Rs.50 crore and not exceeding Rs.500 crore.

Benefits of the scheme:

The scheme is expected to provide credit to the sector at a low cost, thereby enabling MSMEs to meet their operational liabilities and restart their businesses.

By supporting MSMEs to continue functioning during the current unprecedented situation, the Scheme is also expected to have a positive impact on the economy and support its revival.