🆘 ECLGS
Complete guide to Emergency Credit Line Guarantee Scheme (ECLGS 1.0 to 4.0) for COVID-affected businesses
Overview
The ECLGS (Emergency Credit Line Guarantee Scheme) was a special Covid-era liquidity support scheme launched by the Government of India. It provided an Emergency Credit Line to businesses and MSMEs to help them survive the economic distress caused by the pandemic.
- Launch Date: Notified on 23rd May 2020 (Operational since Covid-19).
- Status: The sanction period expired on 31st March 2023.
- Total Corpus: ₹5 Lakh Crore.
- Managed By: NCGTC (National Credit Guarantee Trustee Company).
Objective
The primary goal was to provide 100% guarantee coverage for additional funding (working capital or term loans) sanctioned by banks to eligible borrowers. This ensured that businesses could access funds without any additional collateral.
4 Versions of ECLGS (Evolution)
The scheme evolved in four phases to cover different sectors:
1. ECLGS 1.0 (General Business)
- Target: MSMEs and other businesses (Proprietorships, Partnerships, Trusts, etc.) and MUDRA borrowers.
- Loan Limit: Up to 20% of their total outstanding credit (as of Feb 29, 2020).
- Cap: Maximum loan amount up to ₹50 Crore (initially much lower).
2. ECLGS 2.0 (Stressed Sectors)
- Target: 26 Stressed Sectors identified by the Kamath Committee (e.g., Power, Construction, Textiles) plus the Healthcare sector.
- Features: For borrowers with credit outstanding above ₹50 Crore up to ₹500 Crore.
3. ECLGS 3.0 (Hospitality & Tourism)
- Target: Specifically for Hospitality, Travel & Tourism, Leisure & Sporting, and Civil Aviation sectors.
- Loan Limit: Up to 40% of outstanding credit (Max ₹200 Crore per borrower).
- Special Extension: For Airlines, the limit was later enhanced.
4. ECLGS 4.0 (Oxygen & Healthcare)
- Target: Hospitals, Nursing Homes, Clinics, and Medical Colleges.
- Purpose: Specifically for setting up on-site Oxygen Generation Plants.
- Loan Limit: Up to ₹2 Crore per facility.
Key Features common to all
- Guarantee Cover: 100% guarantee provided by NCGTC. (Bank bears Zero loss).
- Guarantee Fee: NIL. No fee was charged to the borrower or the bank.
- Collateral: Zero. No additional collateral was asked for the additional funding.
- Borrower Type: Existing borrowers with standard accounts (SMA-0 or SMA-1), not NPAs.
Interest Rates & Tenure
To ensure affordable credit, interest rates were capped:
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Overview
The ECLGS (Emergency Credit Line Guarantee Scheme) was a special Covid-era liquidity support scheme launched by the Government of India. It provided an Emergency Credit Line to businesses and MSMEs to help them survive the economic distress caused by the pandemic.
- Launch Date: Notified on 23rd May 2020 (Operational since Covid-19).
- Status: The sanction period expired on 31st March 2023.
- Total Corpus: ₹5 Lakh Crore.
- Managed By: NCGTC (National Credit Guarantee Trustee Company).
Objective
The primary goal was to provide 100% guarantee coverage for additional funding (working capital or term loans) sanctioned by banks to eligible borrowers. This ensured that businesses could access funds without any additional collateral.
4 Versions of ECLGS (Evolution)
The scheme evolved in four phases to cover different sectors:
1. ECLGS 1.0 (General Business)
- Target: MSMEs and other businesses (Proprietorships, Partnerships, Trusts, etc.) and MUDRA borrowers.
- Loan Limit: Up to 20% of their total outstanding credit (as of Feb 29, 2020).
- Cap: Maximum loan amount up to ₹50 Crore (initially much lower).
2. ECLGS 2.0 (Stressed Sectors)
- Target: 26 Stressed Sectors identified by the Kamath Committee (e.g., Power, Construction, Textiles) plus the Healthcare sector.
- Features: For borrowers with credit outstanding above ₹50 Crore up to ₹500 Crore.
3. ECLGS 3.0 (Hospitality & Tourism)
- Target: Specifically for Hospitality, Travel & Tourism, Leisure & Sporting, and Civil Aviation sectors.
- Loan Limit: Up to 40% of outstanding credit (Max ₹200 Crore per borrower).
- Special Extension: For Airlines, the limit was later enhanced.
4. ECLGS 4.0 (Oxygen & Healthcare)
- Target: Hospitals, Nursing Homes, Clinics, and Medical Colleges.
- Purpose: Specifically for setting up on-site Oxygen Generation Plants.
- Loan Limit: Up to ₹2 Crore per facility.
Key Features common to all
- Guarantee Cover: 100% guarantee provided by NCGTC. (Bank bears Zero loss).
- Guarantee Fee: NIL. No fee was charged to the borrower or the bank.
- Collateral: Zero. No additional collateral was asked for the additional funding.
- Borrower Type: Existing borrowers with standard accounts (SMA-0 or SMA-1), not NPAs.
Interest Rates & Tenure
To ensure affordable credit, interest rates were capped:
- Interest Rate Cap:
- Banks: EBLR + 1% (Subject to a max of 9.25%).
- NBFCs: Maximum 14%.
- Repayment Tenure:
- ECLGS 1.0: 4 years (1-year moratorium).
- ECLGS 2.0: 5 years (1-year moratorium).
- ECLGS 3.0: 6 years (2-year moratorium).
- ECLGS 4.0: 5 years (6-month moratorium).
- Note: Tenures were extended in later notifications.
Claim Settlement
Since the guarantee cover is 100%, the claim process is streamlined:
- Intimation: Bank must intimate NCGTC within 90 days of the account turning NPA.
- Interim Claim: NCGTC pays 75% of the guaranteed amount as an interim payment within 30 days.
- Final Claim: The remaining 25% is paid after the conclusion of recovery proceedings.
About NCGTC
National Credit Guarantee Trustee Company Ltd (NCGTC) was incorporated on March 28, 2014, under the Companies Act, 1956. It functions as a common trustee company to manage and operate various credit guarantee trust funds, helping to share the lending risk of financial institutions.
- Ownership: It is a wholly-owned company of the Government of India (Department of Financial Services, Ministry of Finance).
- Key Mandate: To facilitate flow of credit to unserved and underserved sectors (like MSMEs, startups, students) by providing guarantee cover.
- Major Schemes Managed:
- ECLGS (Emergency Credit Line Guarantee Scheme).
- CGFMU (Credit Guarantee Fund for Micro Units - MUDRA).
- CGSS (Credit Guarantee Scheme for Startups).
- Stand Up India (Credit Guarantee Scheme for Stand Up India).
- CGS-NPF (Credit Guarantee Scheme for e-NWR Pledge Financing).
Summary Cheat Sheet
| Concept / Topic | Key Details / Explanation |
|---|---|
| Full Form | Emergency Credit Line Guarantee Scheme. |
| Status | Closed (Sanctions valid till 31.03.2023). |
| Corpus Limit | ₹5 Lakh Crore. |
| Guarantee Name | GECL (Guaranteed Emergency Credit Line). |
| Guarantee % | 100% (Risk fully borne by GoI/NCGTC). |
| Collateral | None (Second charge on existing assets allowed). |
| ECLGS 1.0 | For MSMEs/MUDRA. Limit: 20% of outstanding. |
| ECLGS 2.0 | For 26 Kamath Sectors + Healthcare. Credit up to ₹500 Cr. |
| ECLGS 3.0 | For Hospitality, Tourism & Aviation. Limit: 40%. |
| ECLGS 4.0 | For Oxygen Plants (Hospitals). Max ₹2 Cr. |
| Guarantee Fee | Zero (Waived for all). |
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