ECLGS - Emergency Credit Line Guarantee Scheme

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As small businesses shut down in economically stressful situations, a slowdown of trade and commerce affects the livelihood of people. The government introduced a scheme to reduce stress and help build their trade again. Emergency Credit Line Guarantee Scheme (ECLGS) provides 100 percent coverage to banks and other institutions that lend to these businesses identified by the Kamath Committee. Read on to know more about ECLGS including its features, the purpose of the scheme, and eligibility.

What is Emergency Credit Line Guarantee Scheme (ECLGS)?

The Indian government announced ECLGS in 2020 as a part of the Atma Nirbhar Bharat Package. Their objective is to aid MSMEs (Micro, Small & Medium Enterprises) to resume business and build their business that suffered during the pandemic. As per the scheme, Member Lending Institutions (MLIs) have been assured a 100 percent guarantee in case of non-repayment of the loan.

After being introduced in May 2020, ECLGS was extended multiple times to include more sectors and increase the borrowing limit. In February 2022 it was extended till March 2023 to implement the announcement made in the Union Budget 2022-23. Also, the guarantee cover was expanded by Rs 50,000 crores to increase the total limit of the scheme from Rs 4.5 lakh to Rs 5 lakh crore. As of August 5, 2022, loans of about Rs 3.67 lakh crore were disbursed, as per government data. While earlier the scheme aimed at reviving SMEs and MSMEs, the finance ministry recently enhanced the ECLGS loan amount eligibility for domestic airlines, from Rs 400 crore to Rs 1,500 crore.

Purpose of the Scheme

The scheme aims to help MSME borrowers with the capital required to restart businesses affected by the pandemic.

Who are eligible for ECLGS?

Below, we have listed the eligibility criteria for ECLGS and it has been divided into points for better understanding. The components in the scheme includes 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.

1. ECLGS 1.0

As on February 29, 2022, the scheme provides fully guaranteed credit to business enterprises and individuals for specific business purposes. Their total outstanding credit across lending institutions should be up to Rs. 50 crore.

2. ECLGS 1.0 (Extension)

Under this section, businesses that have availed financial aid under ECLGS 1.0 as of March 31, 2021, are eligible for the scheme.

3. ECLGS 2.0

As on February 29, 2022, borrowers belonging to 26 sectors identified by Kamath Committee with loans above Rs.50 crore to Rs.500 crore and due up 60 days are eligible for the scheme. However, it is also mandatory to meet other terms of the guidelines.

4. Under ECLGS 2.0 (Extension)

As on March 31, 2021, those who have taken aid under ECLGS 2.0 as per the revised date are eligible for the scheme. It’s also mandatory to meet other terms of the scheme.

5. ECLGS 3.0

As on March 2021, those belonging to travel and tourism, leisure, catering, sporting, civil aviation, hospitality, floricultural products, and handling supply chains with due up to 60 days are eligible for the scheme.

6. Under ECLGS 3.0 (Extension)

Businesses that have taken assistance as per ECLGS 3.0 or businesses that qualify under ECLGS 3.0 as on March 31, 2021, or January 31, 2022, are eligible. It is also mandatory to meet other terms of the scheme.

7. ECLGS 4.0

Under this section, hospitals, medical colleges, and units involved in providing liquid oxygen, oxygen cylinders, etc. are eligible. As of March 31, 2021, they should have taken a loan from a lending organization with a due up to 90 days. They are eligible for the aid of up to Rs 2 crore to set up Pressure Swing Adsorption for on-site oxygen-producing plants. An exception has been allowed if their credit card or savings account does not exceed 1 percent of the total loan amount.

under ECLGS 1.0, ECLGS 2.0, and ECLGS 3.0, businesses or entities which had NPA or SMA-2 status as of February 29, 2020, are not eligible. Under ECLGS 4.0, accounts that had NPA status as of March 31, 2020, are not eligible. However, there will be an exception if the borrower’s savings account is not more than 1 percent of the loan. Under ECLGS, the overdue must be regularized before assistance is provided. Also, MLIs should ensure the process they follow covers the overdue.

Other Eligibility Criteria

The business requesting financial aid must have their GST number. However, MSMEs or enterprises that do not need GST registration do not fall under the category. ECLGS 2.0, ECLGS 3.0, and ECLGS 4.0 will be on an ‘Opt-in’ basis. The loans don’t need to be covered under NCGTC or CGTMSE Scheme. There will be no guarantee fee for credit facilities provided under this scheme. Similarly, there will be no processing fee or prepayment charges. The charges for documentation or other charges will be based on the extant guidelines of the bank.


While the above-mentioned are the norms of the current structure of the scheme, the Management Committee for the ECLGS Fund will be the deciding authority about any changes to eligibility, criteria, guarantee fee, rate of interest, and tenor of GECL. There is no guarantee fee for credit facilities provided under this scheme. Similarly, there is no processing fee or prepayment charges. Documentation and other charges will be as per the guidelines of the bank. There will be comprehensive insurance for the securities charged to the bank should be taken depending on the bank clause.