Emergency Credit Line Guarantee Scheme (ECLGS)

Background and Objective

The outbreak of Covid-19 pandemic and following event of social and economic lockdown has brought about a nearly complete halt to all the business activities. The operating cycle in many businesses witnessed sudden cessation as the stocks and payment cycles got stuck completely causing liquidity crisis posing a serious threat to the survival of the businesses.
In its fight to control further damage and support the revival of the business and the economy, the GOI through Ministry of Finance has introduced the Emergency Credit Line Guarantee Scheme (ECLGS), through which the Government is targeting to facilitate Business Enterprises /MSMEs / Individuals who have availed loan for business purposes through Banks and NBFCs/HFCs to provide additional credit to existing borrowers, thereby enabling these enterprises and MSMEs to meet their operational liabilities and restart their businesses.

Eligible Borrowers

This policy shall be applicable to all existing borrowers meeting the policy riders as elaborated here under and will have components as ECLGS 1.0, ECLGS 1.0(Extension), ECLGS 2.0, ECLGS 2.0(Extension), ECLGS 3.0, ECLGS 3.0(Extension) and ECLGS 4.0

ECLGS 1.0 shall be applicable to the borrower accounts pertaining to Business Enterprises /MSMEs / Individuals who have availed loan for business purposes with total credit outstanding (fund based only) across all lending institutions of up to Rs.50 crores as on 29.2.2020

ECLGS 1.0(Extension) refers to the scheme for providing additional support to existing borrowers of ECLGS 1.0 or new borrowers eligible under ECLGS 1.0 based on revised reference date of March 31, 2021.

ECLGS 2.0 shall be applicable to the Business Enterprises /MSMEs in the 26 Covid related stressed sectors identified by the Kamath Committee on Resolution Frame-work and the Healthcare sector, who have availed loan for business purposes with total credit outstanding (fund based only) across all lending institutions above Rs.50 crore and upto Rs.500 crore as on 29.02.2020.

ECLGS 2.0(Extension) refers to the scheme for providing additional support to existing borrowers of ECLGS 2.0 or new borrowers eligible under ECLGS 2.0 based on revised reference date of March 31, 2021.

ECLGS 3.0 shall be applicable in case of Business Enterprises/MSMEs in the Hospitality and related Sectors - Hotels and restaurants, marriage halls, canteens etc, travel and tourism ,travel agents, tour operators, adventure or heritage facilities, leisure and sporting, private bus operators, car repair services, rent-a-car service providers, event/conference organizers, spa clinics, beauty parlours/saloons, motor vehicle aggregators, cinema halls, swimming pools, entertainment parks, theatres, bars, auditorium, yoga institutes, gymnasiums, other fitness centers, units/person engaged in catering or cooking and Floriculture products, and Civil Aviation Sector- Airlines (including scheduled and non-scheduled airlines, chartered flight operators, air ambulances), airports, aviation ancillary services such as ground handling and supply chain.

ECLGS 3.0(Extension) refers to the scheme for providing additional support to existing borrowers of ECLGS 3.0 or new borrowers eligible under ECLGS 3.0 based on revised reference date of March 31, 2021or January 31, 2022.

ECLGS 4.0 shall be applicable to the borrowers running Hospitals/nursing homes/clinics/medical colleges and requiring assistance of upto Rs.2 crore for setting up low cost technologies for on site oxygen generation.

None of the credit facilities availed by the entity from any of the bank or FI should be over 60 days past due as on February 29, 2020 in ECLGS 1.0 , 2.0 & 3.0 and based on the revised reference date of 31st March 2021 in ECLGS 1.0 (Extension) , 2.0(Extension) & the revised reference date of 31st March 2021 or 31 January 2022 in 3.0 (Extension) s.t. being eligible under ECLGS 1.0, , 2.0 & 3.0 respectively and should not be over 90 days past due as on March 31, 2021 in ECLGS 4.0.
Key highlights of policy

- The scheme shall be available for applications getting sanctioned by or before 31.03.2023 or this scheme reaching the threshold stipulated by the Government of India under Emergency Credit Line Guarantee, whichever is earlier.

- The last date of disbursement under this scheme shall be June 30; 2023.

- Business Enterprises / MSME borrower must be GST registered where such registration is mandatory.

- Borrower account should not be over 90 DPD at the time of sanction and disbursement of top up facility under this scheme.

- ECLGS 1.0 scheme will have Opt-out option & borrower can choose to opt-out for this facility. However ECLGS 2.0 , ECLGS 3.0 & ECLGS 4.0 shall be on Opt-in basis.

- The amount of funding under ECLGS would be up to maximum 20% under ECLGS 1.0 & ECLGS 2.0 and up to 50% subject to a cap of Rs.200 crore per borrower under ECLGS 3.0 of the total outstanding as on 29th February; 2020 subject to the borrower meeting all the eligibility criteria and credit evaluation and assessment as per lending norms of the company. The borrowers, who are eligible under ECLGS 3.0 and who have already availed benefit under ECLGS 1.0 or ECLGS 2.0 can be eligible for additional credit up to 20% of their total credit outstanding as on 29.02.2020.

- Under ECLGS 1.0(Extension) and ECLGS 2.0(Extension),the amount of GECL funding to existing ECLGS 1.0 or 2.0 borrowers or new borrowers, either in the form of additional loan facility would be up to 30% of their total credit outstanding (net of support received) as on 29th February, 2020 or 31st March 2021, whichever is higher, subject to the borrower meeting all the eligibility criteria in respective scheme components. Under ECLGS 3.0 (Extension), the amount of GECL funding to eligible borrowers would be. 50% of the total credit outstanding (fund based only) as on 29.02.2020 or 31.03.2021 or 31.01.2022, whichever is higher subject to cap of Rs 200 crore per borrower in borrowers other than aviation sector, and Rs.400 crore per borrower incase of aviation sector.
Under ECLGS 4.0, the amount of funding will be limited to Rs.2 crore per borrower for setting up a low cost on-site oxygen generating plant.

- Total door to door tenor for the new loan will be 48 months with 12 months Principal moratorium in ECLGS 1.0, 60 months with 24 months Principal moratorium in ECLGS 1.0 (Extension), 60 months with 12 months principal moratorium in ECLGS 2.0, 72 months with 24 months Principal moratorium in ECLGS 2.0 (Extension), 72 months with principal moratorium of 24 month under ECLGS 3.0 & ECLGS 3.0 (Extension) and 60 months with principal moratorium of 6 month under ECLGS 4.0, from date of first disbursement. Monthly Interest shall be payable during the Moratorium period.

- No processing Fee will be charged for these loans.

- The interest rate will depend upon various factors, but will not exceed the maximum Rate of interest prescribed in the guidelines for the respective schemes.

- No prepayments charges shall be levied for these loans in case of prepayment of facilities before termination of tenor.

- No additional collateral required and additional funding will be covered by extension of charge on securities already provided.

- All other terms and conditions in loan agreement will remain applicable

For detailed guidelines and FAQs on ECLGS, visit https://www.eclgs.com/

Disclaimer:
This facility is being offered to the eligible borrowers within the scheme guidelines.
Borrower will have to apply for loan through appropriate mode and complete the documentation and furnish the requisite information for processing of the loan.
The company will review the application submitted by the interested borrowers and appraise the application keeping in view, inter alia, the credit & risk parameters of the borrower and any other related factors and take the decision accordingly.
The final decision or loan amount and terms of loan may vary, after due appraisal, diligence and verifications