{"id":21901,"date":"2020-12-14T12:56:41","date_gmt":"2020-12-14T07:26:41","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=21901"},"modified":"2020-12-14T12:56:42","modified_gmt":"2020-12-14T07:26:42","slug":"eclg-scheme-to-attract-more-borrowers-under-msme","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/eclg-scheme-to-attract-more-borrowers-under-msme\/","title":{"rendered":"Government Announced Extension of ECLG Scheme to Attract More Borrowers under MSME"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Indian Government has decided to extend the credit allotment\ntenure under the emergency credit line guarantee scheme, aka ECLG scheme. The\ndecision comes as a huge relief for the credit seeker dealing with a financial\ncrunch due to the ongoing pandemic. It would also attract more borrowers to\nobtain credits during the festive season.&nbsp;<\/p>\n\n\n\n<p>According to the Finance Ministry, the ECLG scheme will now\nremain accessible till Nov. 30 or until the entire disbursement of the 3 lakh\ncrore stimulus package. The ministry also added that as of now, Rs 2.03 lakh\ncrore has been approved by the financial institutions to 60.67 lakh borrowers.\nOut of the aforesaid figure, only 50% of the amount has been disbursed to the\ncredit seekers to date.&nbsp;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/eclg-scheme-to-attract-more-borrowers-under-msme\/#About_the_Emergency_Credit_Line_Guarantee_Scheme_ECLG\" >About\nthe Emergency Credit Line Guarantee Scheme (ECLG)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/eclg-scheme-to-attract-more-borrowers-under-msme\/#Who_all_are_the_Major_Beneficiary_of_the_Scheme\" >Who\nall are the Major Beneficiary of the Scheme?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/eclg-scheme-to-attract-more-borrowers-under-msme\/#What_is_the_Governments_Takes_On_the_Decision\" >What\nis the Government\u2019s Takes On the Decision&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/eclg-scheme-to-attract-more-borrowers-under-msme\/#Hows_the_ELGS_Scheme_Performed_Until_Now\" >How\u2019s\nthe ELGS Scheme Performed Until Now?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/eclg-scheme-to-attract-more-borrowers-under-msme\/#What_are_the_Key_Attributes_of_the_ECLG_Scheme\" >What\nare the Key Attributes of the ECLG Scheme?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/eclg-scheme-to-attract-more-borrowers-under-msme\/#Conclusion\" >Conclusion&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"About_the_Emergency_Credit_Line_Guarantee_Scheme_ECLG\"><\/span>About\nthe Emergency Credit Line Guarantee Scheme (ECLG)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>ECLG scheme was deployed by the government in wake of COVID 19 as a relief package for small companies under the Aatmanirbhar Bharat Mission. The scheme aims to render a fiscal cushion to the <a href=\"https:\/\/corpbiz.io\/msme-registration\"><strong>MSMEs <\/strong><\/a>affected by the Covid-19 pandemic. As per the <strong>RBI\u2019s<\/strong><sup><a href=\"https:\/\/www.rbi.org.in\/\"><strong>[1]<\/strong><\/a><\/sup>statistics between the period of March and Sep 2020, a considerable number of entities took benefits of the scheme resulting 13.85% hike in credit.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_all_are_the_Major_Beneficiary_of_the_Scheme\"><\/span>Who\nall are the Major Beneficiary of the Scheme?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Accessibility of the scheme\nwas limited to the entities with credit outstanding up fifty crores, as of\nFebruary 29, 2020, &amp; yearly revenue of up to Rs 250 crores. At the time of\nthe launch of the scheme, the interest rate was stood at 9.25% for banks and\n14% for private lenders. The maximum tenure per loan was capped at 4 years\nincluding the one year moratorium period.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Governments_Takes_On_the_Decision\"><\/span>What\nis the Government\u2019s Takes On the Decision&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to the ministry \u2013 As the various sectors are gradually\ncoming back on track and the festive season is around the corner, the extension\nof the loan guarantee scheme will help the sector to meet the sudden spike in\nand attract more borrowers. As per the report of the National Institute of Bank\nManagement, the ECLG scheme has provided immense relief to the affected\nentities by rendering timely funding support to initiates the recovery phase.\nThe scheme also helped the entities to addresses the urgent financial\nobligations that seek prompt attention. But on the flip side, the scheme has\nbeen bashed for its obvious disparities like cramped loan amounts and excessive\ndocumentation.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Hows_the_ELGS_Scheme_Performed_Until_Now\"><\/span>How\u2019s\nthe ELGS Scheme Performed Until Now?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>While 72% of respondents getting 59% share of the ECLGS belong\nto micro-units, 9% of respondents with 21 % share of the disbursed credit were\nfrom the small entities, meanwhile, only 2% of respondents with 6% share of the\ndisbursed amount were from medium scale enterprises.&nbsp;<\/p>\n\n\n\n<p>Furthermore, in terms of disbursed amount, only one percent of\napplicants avail over ten lakh rupees amount which was 16.2 % of the 100%\ndisbursed amount. Similarly, 4% of applicants obtained loan between Rs 5 lakh\nand Rs 10 Lakh &#8211; 20.2 % of the disbursed amount, 27% of the applicant availed\ncredit between Rs 1 lakh and Rs 5 Lakh- 47.9% of the disbursed credit, 18%\nobtained loan between Rs 50,000 and Rs 1 Lakh which was 10.4% of the total\namount.&nbsp;<\/p>\n\n\n\n<p>According to the Finance Ministry, banks have approved Rs 1,87,579\ncrore loans to 50.7 lakh MSMEs out of which around 26 lakhs businesses were\ndisbursed with Rs 1,36,140 crore loans in October.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Key_Attributes_of_the_ECLG_Scheme\"><\/span>What\nare the Key Attributes of the ECLG Scheme?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following are the core features of the Emergency Credit Line Guarantee Scheme (ECLGS). The scheme was launched in May to overcome the economic distress created by the COVID 19.\u00a0<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-are-the-Key-Attributes-of-the-ECLG-Scheme.png\" alt=\"Key Attributes of the ECLG Scheme\" class=\"wp-image-21902\" width=\"501\" height=\"501\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-are-the-Key-Attributes-of-the-ECLG-Scheme.png 1000w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-are-the-Key-Attributes-of-the-ECLG-Scheme-150x150.png 150w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-are-the-Key-Attributes-of-the-ECLG-Scheme-300x300.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/What-are-the-Key-Attributes-of-the-ECLG-Scheme-768x768.png 768w\" sizes=\"(max-width: 501px) 100vw, 501px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Name\nof the Facility<\/strong><\/h3>\n\n\n\n<p>Emergency Credit Line Guarantee Scheme (ECLGS) is referred to as\na credit product for which a guarantee is being rendered under the\nscheme.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Purpose\nof the Scheme<\/strong><\/h3>\n\n\n\n<p>The Scheme aims to diminish financial adversity created by the\nCOVID 19 pandemic. It seeks to render additional fiscal aid, thereby allowing\nMSMEs to address the operational liabilities.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Eligible\nCandidates for the Scheme<\/strong><\/h3>\n\n\n\n<p>MSMEs which are constituted as Partnership, Limited Liability\nPartnership, Proprietorship, and Registered Companies were eligible to avail of\nthe scheme.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Credit\nLimit<\/strong><\/h3>\n\n\n\n<p>The credit limit stands at 20% of the borrower\u2019s total\noutstanding amount.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Interest\nRate<\/strong><\/h3>\n\n\n\n<p>The rate of interest has been capped at 14% during the entire\ntenure.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Moratorium<\/strong><\/h3>\n\n\n\n<p>A moratorium period of one year has been provided on the\nprincipal amount.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Tenure<\/strong><\/h3>\n\n\n\n<p>4 years from the disbursement date.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Scheme\u2019s\nValidity<\/strong><\/h3>\n\n\n\n<p>The scheme is applied on all loans approved under the Guaranteed\nEmergency Credit Line.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The ECLG scheme was launched at the time when the majority of the sector was left overwhelmed due to the COVID 19 pandemic. The nationwide lockdown has even forced many entities to close down their establishment for months. The government tried to curb the aftereffect of the pandemic by releasing a loan guarantee scheme for the MSMEs.  The way government handles the financial turbulence created by the COVID 19 pandemic is nothing short of an outstanding accomplishment. The recent announcement indicates that government is proactive enough to encounter ongoing economic adversity.\u00a0\u00a0 <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/positive-and-negative-factors-of-the-implication-of-gst-under-msmes\/\">\nWhat are the Positive and Negative Factors of the Implication of GST under MSMEs?\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Indian Government has decided to extend the credit allotment tenure under the emergency credit line guarantee scheme, aka ECLG scheme. The decision comes as a huge relief for the credit seeker dealing with a financial crunch due to the ongoing pandemic. It would also attract more borrowers to obtain credits during the festive season.&nbsp; [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":21906,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[176],"tags":[1320],"acf":{"service_id":"71"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":3676,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21901"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=21901"}],"version-history":[{"count":10,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21901\/revisions"}],"predecessor-version":[{"id":21913,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21901\/revisions\/21913"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/21906"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=21901"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=21901"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=21901"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}