ECLG - Full Form, Eligibility, Interest Rate and How to Apply

The full form of ECLGS is Emergency Credit Line Guarantee Scheme; it is a type of multipurpose loan offered by the Government of India. The ECLGS primarily aims to provide a line of credit loan facility to MSMEs and business enterprises that have faced hardships due to the pandemic. As a part of the same, government officials provide a 100% credit guarantee on behalf of the National Credit Guarantee Trustee Company (NCGTC). 

The Emergency Credit Line Guarantee Scheme makes up a part of the ₹20 lakh crore package announced by the Indian Finance Ministry back in the early months of the pandemic. It was done to help various struggling enterprises. According to the Emergency Credit Line Guarantee Scheme guidelines, all eligible entities are entitled to a credit of up to 20% of their existing business loan dues starting from February 29, 2020. However, it must be noted that the capping for the same is set at ₹5 Crores.

• The MSME or business enterprise borrower accounts must have a minimum annual turnover of up to ₹250 Crores for FY19-20 and combined outstanding loans of up to ₹50 Crores.

• The MSME or Business Enterprise must be recognised as a partnership, trust, limited liability partnership, proprietorship, or a registered company.

• To be eligible for a credit line provided under the ECLGS loan, the MSME or business enterprise must be a GST-registered entity. However, businesses that do not require a GST licence to operate are eligible for the scheme's beneficiaries' benefits.

• Borrowers must also be existing customers on the books of the Member Lending Institutions (MLIs)

• The ECLGS is not applicable for loans provided in an individual capacity.

• Banks and Financial Institutions: The primary ECLGS interest rate as prescribed by the Reserve Bank of India is an external benchmark-linked rate, which stands at +1% and cannot exceed 9.25% in any given year.

• Non-Banking Financial Companies: In the case of NBFCs, the interest rate should not go beyond 14% per annum.

• Existing Customers of MLIs: No extra fees will be charged from borrowers. The pre-approved benefits must also be forwarded to existing customers of the MLIs.

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