Emergency Credit Line Guarantee Scheme (ECLG Scheme)

Why in the News?

One in every six loans disbursed under the Emergency Credit Line Guarantee Scheme (ECLG Scheme) has turned NPA in 27 months.

Key Points:

About Emergency Credit Line Guarantee Scheme (ECLGS):

• It was announced as part of the Atma Nirbhar Bharat Package in 2020.
  • ECLGS was launched in different phases – ECLGS 1.0, ECLGS 2.0, ECLGS 3.0, ECLGS 4.0.
• The scheme is under the operational domain of Ministry of Finance, Department of Financial Services (DFS).
  • National Credit Guarantee Trustee Company Ltd (NCGTC) has been set up as a company by the Union Ministry of Finance to manage and provide guarantees to these loans.

Objective: 

• To help Micro, Small and Medium Enterprises (MSMEs) sector in view of the economic distress caused by the COVID-19 pandemic.
• To provide 100 percent guaranteed coverage to the banks, NBFCs and other lenders.

Significance of ECLGS

• ECLGS has helped save 1.5 crore jobs in the MSME sector.
• MSME loan accounts worth Rs 1.8 lakh crore were saved from moving into NPA.

Classification of MSME: