ECLGS ALERT! 100% guarantee cover for loans up to Rs 2 crore - Government expands scope of Emergency Credit Line Guarantee Scheme

The Ministry of Finance on Sunday further expanded the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) amid the economic disruption caused by the second wave of the Covid-19 pandemic.

As per an official statement by the Ministry, under the ECLGS 4.0, 100 percent guarantee cover will be extended to loans of up to Rs 2 crore given to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants. The interest rate has been capped at 7.5 per cent for the same.

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"Borrowers who are eligible for restructuring as per Reserve Bank of India (RBI) guidelines of May 5 and had availed loans under ECLGS 1.0 of overall tenure of four years comprising of repayment of interest only during the first 12 months with repayment of principal and interest in 36 months thereafter will now be able to avail a tenure of five years for their ECLGS loan i.e. repayment of interest only for the first 24 months with repayment of principal and interest in 36 months thereafter," the statement read.

The ministry said that additional ECLGS assistance of up to 10 percent of the outstanding as of February 29 to borrowers covered under ECLGS 1.0, in tandem with restructuring as per RBI guidelines of May 5, as per a report by ANI.

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% under Emergency Credit Line Guarantee Scheme (ECLGS) 4.0: Ministry of Finance pic.twitter.com/ln73Jxzeii

— ANI (@ANI) May 30, 2021

"Current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0 to be removed, subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower," it said.

Furthermore, the validity of ECLGS extended to September 30 or till guarantees for an amount of Rs 3 lakh crore has been issued and disbursement under the scheme is permitted up to December 31.

"The modifications in ECLGS would enhance the utility and impact of ECLGS by providing additional support to MSMEs, safeguarding livelihoods and helping in a seamless resumption of business activity. These changes will further facilitate the flow of institutional credit at reasonable terms. Detailed operational guidelines in this regard are being separately issued by the National Credit Guarantee Trustee Company (NCGTC)," the finance ministry said.