The Emergency Credit Line Guarantee Scheme, also known as the ECLGS, was introduced by India’s Ministry of Finance because of the huge amount of economic loss due to the coronavirus COVID-19 pandemic. The Emergency Credit Line Guarantee Scheme is a plan that was a part of the Rs. 20 lakh crore economic package, which included a variety of measures for MSMEs in order to help the businesses for meeting their everyday expenses. The Emergency Credit Line Guarantee Scheme was introduced so that the MSMEs could continue maintaining a certain healthy work capital with a line of credit loan, and had a healthy cash flow.
The Emergency Credit Line Guarantee Scheme has certain specific features. The features of the Emergency Credit Line Guarantee Scheme have been mentioned in detail below:
The Emergency Credit Line Guarantee Scheme Application includes several reports which further help the ECLGS team in understanding the recently updated numbers achieved under the Emergency Credit Line Guarantee Scheme. The Emergency Credit Line Guarantee Scheme Application is meant only for users who are pre-authorized. The Emergency Credit Line Guarantee Scheme Application is not for new users who wish to sign up for the scheme.
The process of Emergency Credit Line Guarantee Scheme Application saves a lot of time and is extremely effective for monitoring and reporting.
In order to apply for ECLGS, there are certain key factors to be kept in mind. The key factors have been mentioned below:
The ECLGS is a scheme introduced by the Government of India keeping in mind the COVID-19 crisis. The amount of the emergency credit line to be extended to MSMEs would be 20% of the entire outstanding amount as of the 29th of February, 2020. The tenure for the ECLGS is a total of 4 years.
The GECL is basically another name for the ECLGS. The GECL or the Guaranteed Emergency Credit Line has a tenure of 48 months.
A credit guarantee scheme is a scheme that provides third-party credit risk mitigation to lenders by absorbing a part of the lender’s losses due defaults on loans given to SMEs. An example is the GECL launched by the Indian government for small and micro business enterprises. It can be availed by both new and existing enterprises.
The Guaranteed Emergency Credit Line, also called the GECL, is a loan that has a tenure of 4 years and for which a complete guarantee of 100% is given by the NCGTC to banks. It is to be extended as a facility of term loan to MSMEs or businesses that are eligible.