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Govt expands credit lifeline for MSMEs amid second wave of Covid-19

Scheme removes the ceiling of outstanding loans of Rs 500 crore, keeps government's guarantee cover of Rs 3 trillion.

Nikunj Ohri Abhijit Lele New Delhi/Mumbai

credit, lending, loans, support, fiscal stimulus, money

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Loans given under ECLGS 1.0 will be eligible for additional assistance up to 10 per cent, raising the total guaranteed loan up to 30 per cent of outstanding as on February 29, 2020 | Illustration: Ajay mohanty

4 min read Last Updated : May 31 2021 | 1:10 AM IST

The government has expanded the Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS) to help businesses hit by the second wave of the Covid-19 pandemic. Dubbed ECLGS 4.0, the scheme has added the civil aviation sector and loan to health institutions for on-site oxygen generation plants.

The Centre has also removed the loan outstanding ceiling of Rs 500 crore of loan outstanding. However, the maximum additional loans they can take under the scheme is limited to 40 per cent of the outstanding loan, or Rs 200 crore, whichever is lower.

Loans given under ECLGS 1.0 will be eligible for additional assistance up to 10 per cent, raising the total guaranteed loan up to 30 per cent of outstanding as on February 29, 2020.