Government expands credit guarantee scheme to include 26 stressed sectors

The emergency credit line guarantee scheme 2.0 (ECGLS 2.0) has been announced for 26 stressed sectors including real estate, power, construction and iron and steel manufacturing.

Created On: Nov 13, 2020 13:17 IST
Nirmala Sitharaman
Nirmala Sitharaman

The Government has decided to expand the scope of emergency credit guarantees to include 26 sectors that are stressed due to the COVID-19 pandemic. 

This was announced during Finance Minister Nirmala Sitharaman’s press conference on November 12, 2020 when she had announced few new measures as a part of the new stimulus package worth Rs 2.65 lakh crore to boost the recovery of the Indian economy. 

Under the expansion of the credit guarantee scheme, the entities will get additional credit up to 20 percent of outstanding credit. The repayment can be done in five years, which includes 1-year moratorium and 4 years of repayment. 

Beneficiaries of the Scheme

The emergency credit line guarantee scheme 2.0 has been launched for 26 stressed sectors including construction, real estate, power and iron and steel manufacturing.

Emergency Credit Line Guarantee Scheme 2.0: Key Highlights 

The scheme will provide support to entities in the healthcare sector and 26 stressed sectors identified by the KV Kamath committee, which has been appointed by the Reserve Bank of India (RBI). 

It will also enable companies with outstanding credit up to Rs 50 crore previously covered under the existing scheme. 

The scheme does not have any upper ceiling on the annual turnover of the entities. 

The companies will get an additional credit up to 20 percent of outstanding as of February 29, 2020. 

Companies with dues past 30 days as of February 29, 2020 can avail credit from banks.
 
The repayment under the scheme can be done in five years, including a one-year moratorium and 4 years of repayment period.

The scheme's validity will remain till March 31, 2021. 
 

Significance

The scheme aims to provide much-needed relief to the stressed sectors by helping them sustain employment and meet all their liabilities. The scheme will also benefit the MSME sector that provides goods and services to the eligible entities. 

Background

The Finance Ministry announced on November 12, 2020 that it has decided to extend the existing Emergency Credit Line Guarantee Scheme for small businesses, business enterprises, individual loans for business purposes till March 31, 2021.

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