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  • Home
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  • DAILY CURRENT AFFAIRS:Union Cabinet approves enhancement in the corpus of Emergency Credit Line Guarantee Scheme by Rs 50,000 crores

Union Cabinet approves enhancement in the corpus of Emergency Credit Line Guarantee Scheme by Rs 50,000 crores

Tags: National Economy/Finance

To help the Hospitality and related sectors, the Union Cabinet, chaired by the Prime Minister Narendra Modi on 17 August 2022, has approved the increase in the Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 50,000 crore. Now the total corpus of the ECLGS is Rs. 5 Lakh crore.

The Rs 50,000 crore amount has been earmarked exclusively for enterprises in hospitality and related sectors which have been badly hit by the Covid-19 pandemic .

Emergency Credit Line Guarantee Scheme (ECLGS)

It was introduced by the Union Ministry of Finance in May 2020 to provide help to the Indian industry which was badly hit by covid-19 pandemic 

Validity of the scheme 

The scheme is valid till 31 March 2023.

Who manages the scheme

It is managed by the  National Credit Guarantee Trustee Company (NCGTC) under the Union Ministry of Finance .

Feature of the scheme 

Loans are provided at a low interest rates by the Scheduled Commercial Banks, All India Financial Institutions and eligible Non- Banking Financial Company (NBFC) to the eligible companies or individual businessmen who were hit hard by the covid pandemic. 

Loan amount under the scheme to various beneficiaries are decided 

The Maximum interest rates which can be charged by the banks and NBFC has been fixed by the Reserve Bank of India.

Guaranteed Loans

The loans are 100% guaranteed by the NCGTC

It means if the borrower under the scheme is not able to pay back the loan under the scheme then the NCGTC will pay the loan amount to the lenders.

The benefit of the Guarantee is that lenders will feel more comfortable in giving loans as they are assured that if the borrowers default then the NCGTC will repay them.

This will boost the economic activity in the country which was badly hit by covid lockdown.

Total Corpus of the Scheme 

The corpus of the scheme has been raised by the government from Rs 4.5 lakh crores to Rs 5 lakh crore.

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