Emergency Credit Line Guarantee Scheme (ECLGS)

Name of the Scheme

The Scheme named as Emergency Credit Line Guarantee Scheme (ECLGS)

Purpose of the Scheme

The Government of India has launched Emergency Credit Line Guarantee Scheme (ECLGS) for Medium, Small
and Micro Enterprises (MSMEs) under the Atma Nirbhar Bharat Abhiyan to help them tide over the economic
distress being faced due to the COVID-19 pandemic for Rs. 3 Lakh Crore. The additional funding is offered
for the purpose of working capital facility to resume business and safeguard jobs

Eligible Borrowers
  • All Business Enterprises /MSME borrower accounts with combined outstanding loans across all the
    Lenders of up to Rs. 25 Crore as on 29.02.2020, and annual turnover of up to Rs. 100 Crore for FY
    2019-20 are eligible for the Scheme.
  • Business Enterprises / MSMEs constituted as Proprietorship, Partnership, registered company, trusts
    and Limited Liability Partnerships (LLPs) shall be eligible under the Scheme.
  • For loans having co-applicant, only those existing loans where entity is the primary co-applicant are
    covered under the Scheme for additional emergency funding.
  • Loans provided in individual capacity are not covered under the Scheme.
  • Borrower accounts should be less than or equal to 60 days past due as on 29.02.2020 in order to be
    eligible under the Scheme. i.e. All borrowers which have not been classified as SMA 2 or NPA by any
    of the Lenders as on 29.02.2020 will be eligible for the Scheme
  • Business Enterprises / MSME borrower must be GST registered in all cases where such registration is
    mandatory. This condition will not apply to Business Enterprises / MSMEs that are not required to
    obtain GST registration.
  • Eligible Business Enterprises / MSME borrowers have ‘opt-out’ option for the facility.
Credit facility offered

Working capital term loan, the financial assistance provided as part of the scheme is to be operated as a
separate loan account.

Loan amount
  • The amount of ECLGS funding additional working capital term loan facility would be up to 20% of
    total outstanding, maximum up to Rs.5 Crore, subject to the borrower meeting all the eligibility criteria
    and credit evaluation and assessment of the Bank.
  • Total Outstanding amount would comprise of the on-balance sheet exposure such as outstanding
    amount across WC loans, term loans and WCTL loans. Off-balance sheet and non-fund based
    exposures will be excluded.
  • In case a borrower has existing limits with multiple lenders, the scheme may be availed either through
    the Bank or multiple lenders depending upon the agreement between the borrower and the Bank.
  • In case the borrower wishes to take from any lender an amount more than the proportional 20% of
    the outstanding credit that the borrower has with that particular lender, a No Objection Certificate
    (NOC) would be required from all other lenders.
Security
  • The additional WCTL facility granted under ECLGS shall rank second charge with the existing credit
    facilities in terms of cash flows and security, with charge on the assets financed under the Scheme
  • No additional credit facility can be granted on the security covered under the ECLGS scheme without permission of NCGTC.
  • No additional collateral is required for additional funding under Scheme.
Interest Rate of Credit under the Scheme
  • Lending rate shall be applicable as per interest rate on advance policy of the Bank and govern by the
    ECLGS guideline rolled out from time to time, Interest rate shall be reviewed on monthly basis and
    reset shall be done on quarterly basis subject to a maximum of 9.25% per annum.
  • No additional processing Fee
  • No Guarantee Fee shall be charged for the Credit facilities provided under the Scheme
  • No pre-payment penalty
  • Applicable Stamp duty shall be borne by the borrower as per stamp act of the state
Duration

The Scheme would be applicable to all loans sanctioned under ECLGS Scheme up to 31.10.2020, or till an
amount of scheme of Rs 3,00,000 crore is sanctioned by all MLIs, whichever is earlier.

Nature of account and Tenor of Credit under the Scheme
  • A separate loan account shall be opened.
  • The tenor of loans provided under the scheme shall be for a tenor of four years from the date of
    disbursement.
  • Moratorium period of one year on the principal amount and during which interest shall be payable
  • The principal shall be repaid in 36 installments along with applicable interest after the moratorium
    period is over.
Definition of Default

The definition of default for borrowers shall be as per the instructions and guidelines issued by the Reserve
Bank of India from time to time under extant norms on income recognition, asset classification and
provisioning.

Modifications in the Scheme

The all norms of ECLGS shall be governed by the operational guideline issued and modification from time to
time by National Credit Guarantee Trustee Company Limited (NCGTC) Any changes to the current structure
of the Scheme, including but not limited to the eligibility criteria, guarantee fee, rate of interest and tenor of
ECLGS under the Scheme, shall be can be modify from time to time

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