Emergency Credit Line Guarantee Scheme, Prime Minister Narendra Modi led the Union Cabinet in approving the Emergency Credit Line Guarantee Scheme (ECLGS). The initiative was launched as part of the Atma Nirbhar Bharat package for Micro, Small, and Medium Enterprises (MSME) borrowers in an effort to alleviate the hardship caused by the COVID-19 pandemic.
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Candidates for the UPSC Prelims 2024 should be aware that the Finance Ministry has broadened the scope of ECLGS. Following its original announcement in May 2020, the Finance Ministry gradually broadened the ECLGS’s purview. Just released in May 2021, ECLGS 4.0 provides 100% guarantee coverage for loans up to Rs. 2 crore to medical colleges, hospitals, nursing homes, and clinics for the establishment of on-site oxygen production plants. 7.5% is the maximum interest rate.
This article will discuss the Emergency Credit Line Guarantee Scheme and its extension. The importance and objectives of the program are also discussed, along with the major groups involved in its management.
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Following the Union Cabinet’s approval of the Emergency Credit Line Guarantee Scheme in May 2020, MUDRA borrowers and Micro, Small and Medium-Sized Enterprises (MSME) were among the sectors to receive additional funding of up to Rs. 3 lakh crores. The program is a component of Prime Minister Narendra Modi’s AtmaNirbhar Bharat Abhiyan, which aims to make India self-sufficient. All loans approved under the Guaranteed Emergency Credit Line (GECL) facility will receive extra credit under the ECLGS. But there are two requirements:
MSMEs in the manufacturing and other sectors suffered significant losses during the nation’s battle against the COVID-19 pandemic. To make up for this loss, the government created the Emergency Credit Line Guarantee Scheme.
The following discusses ECLGS’s primary objectives:
India will gain economically and socially once the MSMEs in the country are operating properly and regularly. This is among the main justifications for the government’s introduction of this program during the exceptional pandemic. Interested candidates can read the attached article to find out more about the Micro Units Development and Refinance Agency (MUDRA) or Pradhan Mantri Mudra Yojana (PMMY).
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To be eligible for a loan under the extended Emergency Credit Line Guarantee Scheme, one must fulfil the following requirements, according to the most recent eligibility criteria:
The loan has a four-year term, and there is a one-year moratorium on the principal amount. [The loan term is currently five years.]
The Indian government announced the ECLGS’s expansion on May 31, 2021. Under the ECLGS 4.0 version:
The program was introduced as part of the Atma Nirbhar Bharat 3.0 package in November 2020. Higher loan amounts and a broader range of sectors are now part of this revamped project.
The following is a discussion of some important points with ECLGS 2.0:
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The Indian government made the decision to take care of achieving national self-reliance in order to revitalise the economy of the nation, which had been severely disrupted by the COVID lockdown. One of the programs is the Emergency Credit Line Guarantee Scheme.
Q. The emergency credit line guarantee program is available to whom?
Ans: The ECLGS scheme is available to any SME or MSME, including partnerships, sole proprietorships, and limited liability partnerships (LLPs). Candidates who have an annual turnover of Rs. 250 crores in FY2019–20 and a total outstanding balance of Rs. 50 crore on February 29, 2020, are eligible.
Q. What advantages does the credit guarantee program offer?
Ans: Through the National Credit Guarantee Trustee Company (NCGTC), the program offers the guarantee. For MIs that lend money to startups, NCGTC offers guaranteed coverage. Up to ₹10 crore, net of the value of any collateral offered can be borrowed without collateral under the plan.
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