Union Cabinet approves of enhancement of limit of ECLGS Scheme

Emergency Credit Line Guarantee Scheme (ECLGS):  The Union Cabinet chaired by Prime Minister Narendra Modi recently approved the enhancement in the limit of Emergency Credit Line Guarantee Scheme (ECLGS) by Rs 50,000 crore.

Key Points:

  • It has been increased from Rs. 4.5 Lakh crore to Rs. 5 Lakh crores.
  • The additional amount has been assigned  exclusively for enterprises in hospitality and related sectors.
  • The increase has been done on account of the severe disruptions caused by COVID-19 pandemic on hospitality and related enterprises.
  • ECLGS is a continuing scheme.
  • The additional amount of Rs. 50,000 crore would be made applicable to enterprises in hospitality and related sectors till validity of the scheme which is 31.3.2023.
  • The enhancement is expected to provide much needed relief to enterprises in these sectors by incentivizing lending institutions to provide additional credit of up to Rs. 50,000 crore at low cost. This in turn will enable these business enterprises to meet their operational liabilities and continue their businesses.
  • Loans of about Rs. 3.67 Lakh crore have been sanctioned under ECLGS till 5.8.2022.


Finance Minister Nirmala Sitharaman in the Union Budget 2022-23 had announced to extend validity of ECLGS upto March, 2023 and increase in the limit of guaranteed cover of ECLGS by Rs 50,000 crore to the total cover to Rs 5 lakh crore to help MSMEs recover from the losses during the pandemic and subsequent lockdowns.

About ECLGS:

  • The Emergency Credit Line Guarantee Scheme (ECLGS) was formulated as a specific response to the unprecedented situation caused by COVID-19 and the consequent lockdown, which has severely impacted manufacturing and other activities in the MSME sector. 
  • The Scheme aims to provide an incentive to Member Lending Institutions (MLIs), i.e., Banks, Financial Institutions (FIs) and Non-Banking Financial Companies (NBFCs) to increase access to, and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by providing them 100% guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers.