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By Esha Malik, Advocate

eshamalik322@gmail.com | April, 23 2021

In view of the second wave of COVID-19 Pandemic in India and its impact, the Government of India has under its Atmanirbhar Bharat Initiative decided to extend its Emergency Credit Line Guarantee Scheme (ECLGS) 1.0 and 2.0 by introducing ECLGS 3.0 for a period of three months i.e. 30th June, 2021 with more advanced and business uplifting changes proposed in the revised scheme.

ECLGS 3.0 is an amended government scheme designed to provide additional support to various stressed service sectors amid the unprecedented Second Wave of COVID-19 and the subsequent lockdown once again to help sustain employment, meet liabilities and reduce the pressure to meet working capital requirements, in turn reviving the Indian economy.

Earlier, the ECLGS Scheme was available to MSME’s only which later was amended through ECLGS 2.0 including 26 stresses sectors. The new ECLGS 3.0 will cover within its fold additional business enterprises in the Hospitality, Travel and Tourism, Leisure and Sporting sectors as identified by the K. V. Kamath Committee having as on 29-02-2020, a total credit outstanding not exceeding Rs. 500 Crores and overdue, if any being less than 60 days from the date i.e. 29-02-2020. However, loans provided in individual capacity will not be covered under this Scheme. Further, borrower accounts declared as NPA or SMA-2 status as on 29-02-2020 shall not be eligible for availing benefit under the Scheme.

ECLGS was first valid until October, 2020 and later extended from time to time last being March, 2021 and now by introducing the ECLGS 3.0 until 30th June, 2021.

Key Highlights of ECLGS 3.0:-

(i) Addition of Additional Credit i.e. 40% outstanding across all lending institutions as on 29-02-2020 as against earlier 20% outstanding overdue;

(ii) Entities to be upto 60 days past overdue as against 30 days under ECLGS 2.0;

(iii) The tenor for such a 100% collateral free loan has been extended upto 6 years with moratorium period of 2 years as against 5 years with Moratorium period of 1 year on principal re-payment;

(iv) Validity of ECLGS 1.0, 2.0 are extended till 30-06-2021 or until Guarantees of Rs. 3 Lakh Crore are issued;

(v) Introduction of Incentives to Member Lending Institutions (MIL’s) like Banks, NBFC’s and other lending institutions to enable availability of funding facility to the eligible beneficiaries providing 100% guarantee by National Credit Guarantee Trustee Company (NCGTC) to such Member Lending Institutions (MLIs).

To conclude, this forward-looking vision and progressive amendment by Government of India is very well appreciated and looked upon by all the eligible stressed sectors hit by the second wave of the Pandemic for a major relief amid the second lockdown and shall also pose a great support to not only businesses but also shall go a long way “in contributing to economic revival, protecting jobs, and creating conducive environment for employment generation” where people are looking for more meaningful roles to play.