Emergency Credit Line Guarantee Scheme (ECLGS) 4.0

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Recently ,the Centre has enhanced the scope of the Emergency Credit Line Guarantee Scheme (now termed ECLGS 4.0) owing to disruptions caused by the second wave of the Coronavirus pandemic.

Major Highlights of ECLGS 4.0

• 3-trillion ECLGS : 
  • The government has expanded the Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS) to help businesses hit by the second wave of the Covid-19 pandemic.
• Civil aviation sector:
  • It added the civil aviation sector and loans to health institutions for on-site oxygen generation plants.
• Removed the loan outstanding ceiling:
  • The Centre has also removed the loan outstanding ceiling of Rs 500 crore of loan outstanding. 
    • However, the maximum additional loans they can take under the scheme is limited to 40 per cent of the outstanding loan, or Rs 200 crore, whichever is lower.
• Additional assistance: 
  • Loans given under ECLGS 1.0 will be eligible for additional assistance up to 10 per cent, raising the total guaranteed loan up to 30 percent of outstanding as on February 29, 2020.
•  Guarantee cover: 
  • The 100 percent guarantee cover offered to hospitals, nursing homes, clinics, and medical colleges for setting up oxygen plants will be available for loans up to Rs 2 crore, with the interest rate capped at 7.5 per cent.

• Validity Extension: 
  • Validity of ECLGS extended to 30.09.2021 or till guarantees for an amount of Rs.3 lakh crore are issued.Disbursement under the scheme permitted up to 31.12.2021.

                                                Image Courtesy :BS

Relevance of the move 

• It would enhance the utility and impact of ECLGS by providing additional support to MSMEs, safeguarding livelihoods and helping in seamless resumption of business activity. 
• These changes will further facilitate flow of institutional credit at reasonable terms.

Source :PIB