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The National Credit Guarantee Trustee Company Limited (NCGTC) on Thursday formally informed banks and non-banking financial companies (NBFC) about expanded Emergency Credit Line Guarantee Scheme (ECLGS) 2.0. This is a follow-up to Finance Minister Nirmala Sitharaman’s announcement on November 12.
While the first version of the scheme will remain, the new version will cover entities in 26 stressed sectors identified by the KV Kamath Committee plus the healthcare sector, with credit outstanding of above ₹50 crore and up to ₹500 crore as on February 29. In both the versions, 20 per cent of credit dues will be given as working capital without any collateral.
The rate of interest charged by banks will not exceed 9.25 per cent. While the first version provides a one-year moratorium on loans and three years for repayment, in the second version, it is one and four years, respectively. There is no change in the overall size of ₹3-lakh crore worth of credit under the scheme. The government feels as ₹2-lakh crore went to smaller businesses, there is headroom available for ₹1-lakh crore which can be used for larger businesses also.
Under the scheme, 100 per cent guarantee for loan would be provided by NCGTC. It will be extended in the form of additional working capital term loan facility and non-fund based facility in case of scheduled commercial banks and financial institutions, and additional term loan facility in case of NBFCs, to eligible MSMEs/business enterprises, individual borrowers in case of the original loan having been for own business and interested Pradhan Mantri Mudra Yojana (PMMY) borrowers. Credit under GECL would be up to 20 per cent of the borrower’s total outstanding credit up to ₹500 crore, excluding off-balance sheet and non-fund based exposures, as on February 29, i.e., additional credit will be up to ₹100 crore.
Opt-in basis
Facility under ECLGS 1.0 was an ‘opt-out’ option — to enable eligible borrowers to choose whether they wish to opt out of the GECL facility. Facility under ECLGS 2.0, however, shall be on ‘Opt-in’ basis.
Also under ECLGS 1.0, borrower accounts should be less than or equal to 60 days past due as on February 29, 2020 in order to be eligible under the scheme. Under ECLGS 2.0, the borrower accounts should be less than or equal to 30 days past due as on February 29, 2020.
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