Emergency Credit Line Guarantee Scheme (ECLGS)

IN NEWS:

• Finance minister Nirmala Sitharaman recently allowed loans for larger MSMEs and professionals for business purposes within the ambit of Emergency Credit Line Guarantee Scheme (ECLGS).

About ECLGS:

• ECLGS was announced as a part of the government’s Rs.20 trillion financial package to help the poor and small businesses due to Covid-19.
• This collateral-free loan is expected to enable small businesses to pay salaries, rent and to help with restocking expenses.
• The scheme provides incentives to banks and non-bank lenders to offer additional funding facility to small borrowers by providing them 100% guarantee for any losses suffered by the lenders due to any default.
• The finance ministry has now increased the annual turnover ceiling of companies that could avail loans under the scheme to Rs.250 crore from Rs.100 crore at present.
• The maximum amount of loans that can be availed under the scheme has also been increased to Rs.10 crore from Rs.5 crore.
• Individuals can avail themselves of ECLGS if they already had loans for business purposes and subject to condition that they fulfill eligibility criteria.

PRELIMS QUESTION

Which of the following sectors is the main target of Emergency Credit Line Guarantee Scheme (ECLGS), recently announced by Finance ministry:
(a)Agriculture sector
(b)Food processing sector
(c)MSME sector
(d)Scheduled Commercial Banks

Answer to prelims question