Objectives of Emergency Credit Line Guarantee Scheme
- The primary goal of the Scheme is to encourage Member Lending Institutions (MLIs), which include Banks, Financial Institutions (FIs), and Non-Banking Financial Companies (NBFCs), to increase access to and make available additional funding facilities to MSME borrowers in light of the economic distress brought on by the COVID-19 crisis.
- The scheme will offer them a 100 percent guarantee for any losses they may incur as a result of borrowers failing to repay Guaranteed Emergency Credit Line (GECL) funding. This guarantee is provided by the National Credit Guarantee Trustee Company Limited (NCGTC).
- Additionally, it will offer affordable finance to the industry, allowing small enterprises to satisfy their operating obligations and resume production and employment.
- It would improve MSME and MUDRA borrowers’ access to and facilitate the availability of new lending facilities.
- The Scheme provides MSMEs with additional liquidity in the form of a fully guaranteed emergency credit line in an effort to lessen the financial hardship they are now experiencing.
Emergency Credit Line Guarantee Scheme
The Emergency Credit Line Guarantee Scheme (ECLGS) was approved by the Union Cabinet under Prime Minister Narendra Modi’s leadership in May 2020. The program was introduced as a component of the Atma Nirbhar Bharat package for Micro, Small, and Medium Enterprises (MSME) borrowers to lessen the hardship brought on by the COVID-19 pandemic. The Scheme is anticipated to benefit the economy and aid in its recovery by assisting MSMEs to continue operating in the face of the current unusual scenario.