Emergency Credit Line Guarantee Scheme

Disclaimer….before you read ahead!

The information contained herein is of a general nature and for information purposes only, with the intent of raising awareness around various resources, schemes etc. available for women entrepreneurs in India. It is not intended to address the circumstances of any particular individual or entity. It does not purport to be all-inclusive or necessarily contain all the information that may be relevant for the reader, and may be subject to updation, revision or amendment. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to remain accurate in the future. The reader, therefore, is required to exercise their discretion; and not act on such information without appropriate professional advice after a thorough examination of the particular situation.

Furthermore, we are not a lender and are not authorized by the Reserve Bank of India to act as one. By disseminating the information contained herein, we are not soliciting any borrower or customers for the company or organization mentioned herein nor do we intend to syndicate any capital for the reader of this email.

About the scheme…
Emergency Credit Line Guarantee Scheme (ECLGS), a specific response to the unprecedented situation COVID-19, was launched by Government of India (GOI) on May 23, 2020, as part of Aatma Nirbhar Bharat Abhiyaan, to provide much needed relief to Business Enterprises or Micro, Small and Medium Enterprises (MSMEs) by incentivizing Member Lending Institutions (MLIs) to provide additional credit of up to ₹3 Lakh Crores ₹4.5 Lakh Crores at low cost to support various businesses impacted by the first and second wave of COVID 19 pandemic. Thereby enabling Business Enterprises or MSMEs to meet their operational liabilities and restart their businesses.

This Scheme is being implemented by National Credit Guarantee Trustee Company Ltd. (NCGTC), a Government of India Enterprise.

How is it being implemented?

I. Subject Matter

Under ECLGS, 100% guarantee coverage is being provided to MLIs namely, Banks, Financial Institutions (FIs) and NBFCs to enable them to extend emergency credit facilities to eligible Business Enterprises or MSMEs in view of COVID-19, to meet their additional term loan, working capital requirements. For more information on eligible MLIs, refer to its definition on Page 3 here.

Such emergency credit facilities, called Guaranteed Emergency Credit Line (GECL), comprising of fund based and/or non-fund based credit facilities, is given by MLIs to their existing MSME borrowers (including Business Enterprises, Individual business loan borrowers) alone except for existing hospitals/nursing homes/clinics/ medical colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc., looking to set up on-site oxygen producing plants and who may not be MLIs existing borrowers.

For information on the latest available list of registered MLIs offering GECL, please click here.

II. Constituents

ECLGS now has three four constituents:

• ECLGS 1.0 covers all Business Enterprises or MSME or Individual borrower accounts (including MUDRA borrowers) with MLIs whose total credit outstanding (fund based only) availed for business purposes across all lending institutions and days past due as on February 29, 2020 was upto ₹50 Crores and upto 60 days respectively
  • ECLGS 1.0 (Extension) covers borrowers who have availed assistance under ECLGS 1.0 or new businesses which are eligible under ECLGS 1.0 based on the revised reference date of 31st March 2021
• ECLGS 2.0 covers Business Enterprises or MSME borrower accounts with MLIs in 26 sectors identified by the Kamath Committee on Resolution Framework vide its report dated September 4, 2020 and the Healthcare sector, whose total credit outstanding (fund based only) availed for business purposes across all lending institutions and days past due as on February 29, 2020 was above ₹50 Crores and not exceeding ₹500 Crores, and upto 60 days respectively. For information on the said 26 sectors in addition to the healthcare sector please refer to Page 12 of the said report.
  • ECLGS 2.0 (Extension) covers borrowers who have availed assistance under ECLGS 2.0 or new businesses which are eligible under ECLGS 2.0 based on the revised reference date of 31st March 2021

• ECLGS 3.0 covers Business Enterprises or MSME borrower accounts with MLIs in Hospitality (hotels, restaurants, marriage halls, canteens etc.), Travel & Tourism, Leisure & Sporting & Civil Aviation (scheduled and non-scheduled airlines, chartered flight operators, air ambulances and airports) sectors, whose total credit outstanding (fund based only) across all lending institutions and days past due as on February 29, 2020 was upto₹500 Crores, and upto 60 days
  • ECLGS 3.0 (Extension) covers borrowers who have availed assistance under ECLGS 3.0 or new businesses which are eligible under ECLGS 3.0 based on the revised reference date of 31st March 2021
• ECLGS 4.0 covers existing hospitals/nursing homes/clinics/ medical colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc.; requiring financial assistance for setting up technologies like Pressure Swing Adsorption etc. for setting up of on-site oxygen producing plants; whose days past due on credit facility from any lending institution (which may or may not be an MLI) as on March 31, 2021 is upto 90 days

III. Validity

• This Scheme would be applicable to all loans sanctioned under GECL during the period from May 23, 2020 to June 30, 2021 September 30, 2021 March 31, 2022, or till guarantees for an amount of ₹3 Lakh Crores ₹4.5 Lakh Crores are issued by NCGTC, whichever is earlier. The disbursement of the fund-based facility, however, can be availed upto September 30, 2021 December 31, 2021 June 30, 2022.
• Guarantee cover for non-fund based portion of facility (provided under ECLGS 2.0, ECLGS 2.0 (Extension) & ECGLS 4.0 alone) can be availed during the 5 year tenor of facility sanctioned, provided the first tranche has been utilized on or before September 30, 2021 December 31, 2021 June 30, 2022.

What’s on offer?

Below are the features of GECL offered by MLIs to their existing MSME borrowers across various constituents of ECLGS. For more information, refer to; ECLGS’ latest operational guidelines, FAQs or contact your lender(s).

I. Product:

• ECLGS 1.0:
  • GECL in form of additional working capital term loan facility, term loan facility of upto 20% of eligible borrower’s total fund based credit outstanding across all lending institutions as on February 29, 2020, i.e.upto ₹10 Crores
  • Borrowers who have availed assistance under ECLGS 1.0 and are eligible for restructuring as per RBI guidelines of May 05, 2021 (as amended vide RBI Circular dated June 04, 2021 – Circular 1 & Circular 2), shall be permitted to avail additional assistance of upto 10% of their outstanding as on February 29, 2020 with the respective MLI, provided they have not availed additional assistance under ECLGS 3.0. They shall not be subsequently eligible for ECLGS 3.0, i.e. borrowers may either avail of this additional 10% or additional assistance under ECLGS 3.0, but not both.

• ECLGS 1.0 (Extension):
  • GECL in form of additional working capital term loan facility, term loan facility of upto 30% (enhanced from the present 20%) of eligible borrower’s total fund based credit outstanding (excluding support under ECLGS 1.0) across all lending institutions as on February 29, 2020 or March 31, 2021, whichever is higher; i.e. upto ₹15 Crores
    • Existing borrowers under ECLGS 1.0 would be eligible for additional credit support of upto 10% of total credit outstanding (excluding support under ECLGS 1.0) as on February 29, 2020 or March 31, 2021, whichever is higher
    • Existing borrowers under ECLGS 1.0 whose total fund based credit outstanding (excluding support under ECLGS 1.0) as on March 31, 2021 is higher than that on February 29, 2020 shall be eligible for incremental support within the cap stipulated under ECLGS 1.0
    • Businesses who have not availed assistance under ECLGS 1.0, can avail credit support of upto 30% of their total fund based credit outstanding as on February 29, 2020 or March 31, 2021, whichever is higher

• ECLGS 2.0:
  • GECL in form of additional working capital term loan facility, or term loan facility and/or non-fund based facility, of upto 20% of eligible borrower’s total fund based credit outstanding across all lending institutions as on February 29, 2020, i.e. upto ₹100 Crores.

• ECLGS 2.0 (Extension):
  • GECL in form of additional working capital term loan facility, term loan facility and/or non-fund based facility, of upto 30% (enhanced from the present 20%) of eligible borrower’s total fund based credit outstanding (excluding support under ECLGS 2.0) across all lending institutions as on February 29, 2020 or March 31, 2021, whichever is higher; i.e. upto ₹150 Crores
    • Existing borrowers under ECLGS 2.0 would be eligible for additional credit support of upto 10% of total credit outstanding (excluding support under ECLGS 2.0) as on February 29, 2020 or March 31, 2021, whichever is higher
    • Existing borrowers under ECLGS 2.0 whose total fund based credit outstanding (excluding support under ECLGS 2.0) as on March 31, 2021 is higher than that on February 29, 2020 shall be eligible for incremental support within the cap stipulated under ECLGS 2.0
    • Businesses who have not availed assistance under ECLGS 2.0, can avail credit support of upto 30% of their total fund based credit outstanding as on February 29, 2020 or March 31, 2021, whichever is higher

• ECLGS 3.0:
  • GECL in form of additional working capital term loan facility, term loan facility of upto 40% of eligible borrower’s total fund based credit outstanding across all lending institutions as on February 29, 2020, i.e. upto subject to a cap of ₹200 Crore. Such borrowers, who are eligible under ECLGS 3.0 and have already availed benefit under ECLGS 1.0 or ECLGS 2.0 shall be eligible for additional credit upto 20% of their total credit outstanding as on February 29, 2020 under ECLGS 3.0.
• ECLGS 3.0 (Extension):
  • GECL in form of additional working capital term loan facility, term loan facility of upto 40% of eligible borrower’s total fund based credit outstanding (excluding support under ECLGS 3.0) across all lending institutions as on February 29, 2020 or March 31, 2021, whichever is higher, subject to a cap of ₹200 Crore
  • Existing borrowers under ECLGS 3.0 whose total fund based credit outstanding (excluding support under ECLGS 3.0) as on March 31, 2021 is higher than that on February 29, 2020 shall be eligible for incremental support within the cap stipulated under ECLGS 3.0
  • Businesses who have not availed assistance under ECLGS 3.0, can avail credit support of upto 40% of their total fund based credit outstanding as on February 29, 2020 or March 31, 2021, whichever is higher, subject to a cap of ₹200 Crore
  • Such borrowers, who are eligible under ECLGS 3.0 (Extension) and have already availed benefit under ECLGS 1.0 or ECLGS 2.0 or ECLGS 1.0 (Extension) or ECLGS 2.0 (Extension) shall be eligible for additional credit upto 10% or 20%, as the case may be, of their total credit outstanding (excluding support under ECLGS) as on February 29, 2020 or March 31, 2021, whichever is higher; subject to a cap of ₹200 Crore

• ECLGS 4.0:
  • GECL in form of term loan facility or non fund based facility (LC for import of capital goods) of upto ₹2 Crore for technologies like Pressure Swing Absorption etc. for setting up on-site oxygen producing plant
• While additional working capital term loan facility and/or non-fund based facility is offered by MLIs who are Banks or FIs, additional term loan facility is offered by MLIs who are NBFCs
• Total fund based credit outstanding referred to above comprise of on-balance sheet exposure such as outstanding across working capital loans, term loans and working capital term loans. Off-balance sheet and non-fund based exposures will be excluded
• Under the expanded scheme, the above mentioned limits w.r.t. admissible guarantee and loan amount is proposed to be increased above the existing level of 20% of total fund based credit outstanding for each borrower. Sector wise details will be finalized as per evolving needs. We are keeping an eye for this and will update as soon as details are finalized 

II. Purpose:

• Working capital requirements
• Fixed asset acquisition (under ECLGS 4.0 alone)

III. Borrower Type:

• Individuals (under ECLGS 1.0 alone), Sole Proprietorship, Partnership, Trusts, Limited Liability Partnerships (LLPs), Registered Company or any other legal entity

IV. Security or Collateral or Guarantee or Insurance

• Security:
  • Facilities extended as GECL shall rank second charge with the existing credit facilities in terms of cash flows (including repayments) and security, with charge on the assets financed under this Scheme to be created on or before September 30, 2021 or date of borrower account becoming a non-performing asset (NPA), whichever is earlier within a period of 3 months from the date of disbursement or till December 31, 2021 June 30, 2022 but in any case prior to the account being classified as a non-performing asset (NPA)
  • Such stipulation of second charge has been waived off w.r.t all loans up to ₹25 Lakhs (outstanding as on February 29, 2020 plus loan sanctioned under GECL), subject to MLI ensuring to safeguard the interests of NCGTC in the form of a suitable undertaking from the borrower.
  • Additionally, borrowers availing assistance under ECLGS 4.0 shall open an Escrow Account on which MLI shall have its first charge
• Collateral: Nil
• Guarantee: NCGTC extends a 100% guaranteed coverage on outstanding amount of facilities extended as GECL under this Scheme as on the date of account becoming NPA or on the date of lodgment of claim, whichever is lower. This is at no additional cost to borrower or MLI
• Insurance: For more information on this, please contact your lender

V. Interest Rate

• W.r.t Banks and FIs, lending rate linked to one of the External Benchmark Lending Rate prescribed by RBI (for MSMEs) or Marginal Cost of Lending Rate (for non-MSMEs) + 1%, subject to a maximum of 9.25% pa
• W.r.t NBFCs, the interest rate shall not exceed 14% pa
• However, for ECLGS 4.0 alone, interest rates have been capped at 7.5%
• This Scheme may be operated in combination with applicable interest subvention schemes, as far as feasible
• No penal interest due to any non-compliance of the already accepted covenants on the existing credit facilities may be charged on additional loans extended as GECL at the time of sanction

VI. Processing Fee

• Nil since GECL is being extended to existing borrowers of MLIs
• For information around processing fee under ECLGS 4.0, please contact your lender

VII. Margin Money Requirement

• For fund based facility, not applicable
• For non-fund based facility under ECLGS 2.0 & 4.0, left to the discretion of the MLI

VIII. Tenure, Repayments& Pre-Closures

• ECLGS 1.0: 4 years from the date of first disbursement including 1 year moratorium on repayment towards principal
  • For borrowers under ECLGS 1.0 who have availed additional assistance as a part of restructuring as per RBI guidelines as described in “I. Product” above, such additional assistance shall be repayed in 5 years from the date of first disbursement including 2 years moratorium on repayment towards principal

• ECLGS 1.0 (Extension): 5 years from the date of first disbursement including 2 year moratorium on repayment towards principal
• ECLGS 2.0: 5 years from the date of first disbursement of fund based facility (including 1 year moratorium on repayment towards principal) or first date of utilization of non-fund based facility, whichever is earlier. To be eligible for guarantee cover of the sanctioned non-fund based facility, first utilization must happen on or before September 30, 2021 December 31, 2021 June 30, 2022. There shall be no moratorium for non-fund based facility
• ECLGS 2.0 (Extension): 6 years from the date of first disbursement of fund based facility (including 2 year moratorium on repayment towards principal) or first date of utilization of non-fund based facility, whichever is earlier. To be eligible for guarantee cover of the sanctioned non-fund based facility, first utilization must happen on or before June 30, 2022. There shall be no moratorium for non-fund based facility
• ECLGS 3.0 & ECLGS 3.0 (Extension): 6 years from the date of first disbursement of fund based facility including 2 years moratorium on repayment towards principal

• ECLGS 4.0: 5 years from the date of first disbursement of fund based facility (including 6 months moratorium on repayment towards the principal) or first date of utilization of non-fund based facility, whichever is earlier. To be eligible for guarantee cover of the sanctioned non-fund based facility, first utilization must happen on or before December 31, 2021 June 30, 2022. There shall be no moratorium for non-fund based facility
• Interest shall however be payable during the moratorium period
• The last date of disbursement for fund based facility under this Scheme shall be September 30, 2021 December 31, 2021 June 30, 2022
• No pre-payment penalty shall be charged by MLIs in case of early repayment

IX. Turnaround Time

• Prescribed by Department of Financial Services (DFS), GOI for credit support in the context of COVID-19 pandemic which may be as short as 6 to 9 working days going upto maximum 12 to 15 working days

Interested? Read ahead to check if this fellowship is meant for you….

I. Are you an existing borrower on the books of MLI?

OR

Are you an existing hospitals/nursing homes/clinics/ medical colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc. looking to set up on-site oxygen producing plants?

OR

Have you availed assistance under ECLGS 1.0, ECLGS 2.0 or ECLGS 3.0?

II. Is your business not required to obtain GST registration?

OR

Basis if GST registration is mandatory, is your business registered under GST?

III. Was the total credit outstanding (fund based only) of your business across all lending institutions and days past due as on February 29, 2020 was upto ₹50 Crores and upto 60 days respectively?

OR

Was the total credit outstanding (fund based only) of your business across all lending institutions and days past due as on March 31, 2021 was upto ₹50 Crores and upto 60 days respectively?

OR

In case your business falls under 26 sectors identified by the Kamath Committee on Resolution Framework vide its report dated September 4, 2020 or the Healthcare sector, was the total credit outstanding (fund based only) of your business across all lending institutions and days past due as on February 29, 2020 was above ₹50 Crores and not exceeding ₹500 Crores, and upto 60 days respectively? For information on the said 26 sectors in addition to the Healthcare sector, For information on the said 26 sectors in addition to the Healthcare sector, please refer to Page 12 of the said report.

OR

In case your business falls under 26 sectors identified by the Kamath Committee on Resolution Framework vide its report dated September 4, 2020 or the Healthcare sector, was the total credit outstanding (fund based only) of your business across all lending institutions and days past due as on March 31, 2021 was above ₹50 Crores and not exceeding ₹500 Crores, and upto 60 days respectively? For information on the said 26 sectors in addition to the Healthcare sector, For information on the said 26 sectors in addition to the Healthcare sector, please refer to Page 12 of the said report.

OR

In case your business falls under Hospitality (hotels, restaurants, marriage halls, canteens etc.), Travel & Tourism, and Leisure & Sporting & Civil Aviation (scheduled and non-scheduled airlines, chartered flight operators, air ambulances and airports) sectors, was the total credit outstanding (fund based only) of your business across all lending institutions and days past due as on February 29, 2020 on total credit outstanding (fund based only) of your business across all lending institutions was upto ₹500 Crores, and upto 60 days respectively?

OR

In case your business falls under Hospitality (hotels, restaurants, marriage halls, canteens etc.), Travel & Tourism, Leisure & Sporting & Civil Aviation (scheduled and non-scheduled airlines, chartered flight operators, air ambulances and airports) sectors, was the days past due as on March 31, 2021 on total credit outstanding (fund based only) of your business across all lending institutions was upto 60 days?

OR

Is your hospitals/nursing homes/clinics/ medical colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc. and days past due on credit facility from any lending institution (which may or may not be an MLI) as on March 31, 2021 is upto 90 days?

OR

Have you availed facility under ECLGS 1.0 and are seeking restructuring as per RBI guidelines of May 05, 2021 (as amended vide RBI Circular dated June 04, 2021 – Circular 1 & Circular 2)?

If your answers to the questions above are an emphatic YES, you are all set to avail loans under ECLGS!

So…how big is this scheme and what has been done so far?

I. Since its launch in May 2020 through February 28, 2021, loans worth ₹2.46 Lakh Crores i.e. 82% of the allocated ₹3 Lakh Crores, have been sanctioned under this Scheme across 92.27 Lakh borrowers

II. Of the said 92.27 Lakh borrowers, 95% i.e.87.50 lakh were MSMEs

III. As of the May 31 2021, loans worth ₹2.54 Lakh Crores i.e. 85% of the allocated ₹3 Lakh Crores, have been sanctioned, and ₹2.4 Lakh Crores disbursed under this Scheme. MLIs now have headroom to take up fresh proposals worth ₹45,000 Crores on or before September 30, 2021

I. As of July 2, 2021, loans worth ₹2.73 Lakh Crores, i.e. around 61% of the allocated ₹4.5 Lakh Crores, have been sanctioned, of which, ₹2.14 Lakh Crores disbursed by partner MLIs comprising of 12 Public Sector Banks, 25 Private Sector Banks, and 31 Non-Banking Finance Companies

II. Of this, guarantees have already been issued for loans worth ₹1.65 Lakh Crores granted to around 1.09 Crore MSMEs

I. As of September 24, 2021, loans worth ₹2.86 Lakh Crores, i.e. around 64% of the allocated ₹4.5 Lakh Crores, have been sanctioned

II. Of this, guarantees have already been issued for loans worth ₹2.72 Lakh Crores (95% of total guarantees) granted to around 1.15 Crore MSMEs

So, now, how should you o about it?

I. For availing loans under GECL:

• This is a pre-approved loan facility. An offer will go out from the MLI to the eligible borrowers for a pre-approved loan which the borrower may choose to accept. If the borrower accepts the offer, it will be required to complete requisite documentation. If the borrower is not interested in availing the loan, he/she may indicate accordingly
• If you meet the above mentioned eligibility criteria but have not heard from your lender on such a pre-approved GECL facility, please reach out to them
• In case you are an existing hospitals/nursing homes/clinics/ medical colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc. and are looking to set up on-site oxygen producing plants, please reach out to any registered MLI. For information on the latest available list of registered MLIs offering GECL, please click here.

II. For information on:

• Latest operational guidelines around ECLGS, please check here
• Frequently asked questions w.r.t ECLGS, please check here

III. For any queries, 

• Contact your lender who is registered as an MLI. For information on the latest available list of registered MLIs offering GECL, please click here.
• E-mail NCGTC Business Support eclgs@ncgtc.in

Go on then…and do spread the word!

Sources:

1. About the Scheme
2. About the Scheme
3. Latest Update on the Scheme
4. ECLGS Operational Guidelines updated as of October 20, 2021
5. FAQs updated as of October 1, 2021
6. Extension & latest updates
7. Timelines to disburse COVID-19 emergency credit lines: Finance Minister stipulates time frame for banks to disburse loans; move comes as lenders turning risk averse; Covid-19: Centre expands Emergency Credit Line Guarantee Scheme amid second wave (msn.com)
8. Recent Data 1 on ECLGS
9. Recent Data 2 on ECLGS
10. Old Data 4 on ECLGS
11. Old Data 3 on ECLGS
12. Old Data 2 on ECLGS
13. Old Data 1 on ECLGS