The Emergency Credit Line Guarantee Scheme (ECLGS) was unveiled as part of the Rs 20 lakh crore comprehensive package announced by Finance Ministry on 13/05/2020, to aid Micro, Small and Medium Enterprises (MSME) sector in view of the economic distress caused by the COVID-19 pandemic.
The ECLGS is under the domain of the Ministry of Finance, Department of Financial Services (DFS)
Essentially during pandemic phase it was very hard for MSME sector to survive without the blood of business i.e sales but they had to bear fixed & variable cost (employee expenses mainly) and to maintain this they faced shortage of fund.
In hard times lender is concerned about the return of capital instead of thinking about return on investment because it is high chance that borrower won't be able to pay even interest so lenders were hesitating to finance the need of business so in this situation government lunched a scheme which was backed by them in case of any defaults and named this scheme Emergency Credit Line Guarantee Scheme (ECLGS).
The ECLGS aims to provide 100 percent guaranteed coverage to the banks, non-banking financial institutions (NBFCs) and other lending institutions in order to enable them to extend emergency credit to business entities that have suffered due to the Covid-19 pandemic and are struggling to meet their working capital requirements.
Result of this is government has saved 13.5 lakh firms to going bankrupt and 1.5 crores jobs as on today.
The last date of disbursement under the scheme has been extended to June 30, 2022.
MSME Minister Narayan Rane informed the Lok Sabha in a written reply that "As informed by DFS, as on November 19, 2021, Rs 2.82 lakh crore of loans have been sanctioned under the scheme,"
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