Women Entrepreneurs From Haryana Biggest Beneficiaries Of ECLGS

The Union government’s Emergency Credit Line Guarantee Scheme (ECLGS) launched to assist MSMEs during the Covid disruption has benefitted nearly 2 lakh women entrepreneurs in the region. According to data tabled in the Parliament, Rs 1,192 crore worth loans were guaranteed to women-run businesses under the ECLGS, especially to micro, small and medium enterprises (MSMEs), in the region.

Women entrepreneurs from Haryana have been the biggest beneficiaries. Loans worth Rs 566 crore were disbursed in 94,587 cases. In Punjab and Himachal, Rs 378 crore in 88,427 cases and Rs 109 crore to 8,436 women entrepreneurs, respectively, were guaranteed. In the UTs of J&K, Chandigarh and Ladakh, loans to the tune of Rs 103 crore, Rs 29 crore and Rs 7.50 crore were guaranteed to 4,240, 1,340 and 171 women applicants, respectively.

The largest numbers of loans were granted in the trading sector including small kirana shops, followed by food processing, textiles and commercial dairy.

In a written reply to a question in Parliament, Minister of Women and Child Development Smriti Irani said under the ECLGS, 81.18 lakh women beneficiaries across the country have been provided guarantees of loans as of February 28, 2022.

According to a study by SBI Research, the ECLGS has helped 13.5 lakh MSME units, saved 1.5 crore jobs and prevented 14% of the MSME loans from turning into non-performing assets (NPAs).

What is an Emergency Credit Line Guarantee Scheme?

The ECLGS aims to provide 100 percent guaranteed coverage to the banks, NBFCs and other lenders in order to enable them to extend emergency credit to businesses hit by the Covid-19 pandemic and struggling to meet their working capital requirements.

In order to mitigate the stress caused by the Covid-19 pandemic on several sectors across the country, the government has announced an Emergency Credit Line Guarantee Scheme, which incorporates ECLGS 1.0, ECLGS 2.0 and ECLGS 3.0.

What is the purpose of the Emergency Credit Line Guarantee Scheme?

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.

The ECLGS was launched as part of the Rs 20 lakh crore Covid-19 relief package called the Atma Nirbhar Bharat Abhiyan. The scheme aimed to provide Rs 3 lakh crore worth of collateral-free, government-guaranteed loans to micro, small and medium enterprises (MSMEs) across India to mitigate the distress caused by the coronavirus-induced lockdown

ECLGS 1.0 had a 1-year moratorium period and a 4-year repayment period.

Under the scheme, borrowers could avail of additional credit of up to 20 percent of their overall outstanding credit as on February 29, 2020. The scheme was envisaged to provide collateral-free and fully guaranteed credit to entities that had outstanding credit of up to Rs 25 crore as of February 29, 2020, with an annual turnover cap of Rs 100 crore for the financial year 2019-2020.

The scheme was valid till October 2020 but was later extended till November end.

What is ECLGS 2.0?

In November 2020, Finance Minister Nirmala Sitharaman announced the launch of ECLGS 2.0 by extending the Rs 3 lakh crore schemes to support 26 stressed sectors identified by the Kamath Committee and the healthcare sector. The scheme was valid till March 31, 2021.

These sectors included power, construction, iron and steel manufacturing, roads, real estate, textiles, chemicals, consumer durables, non-ferrous metals, pharma manufacturing, logistics, gems and jewellery, cement, auto components, hotels-restaurants-tourism, mining, plastic product manufacturing, automobile manufacturing, auto dealerships, aviation, sugar, ports and port services, shipping, building materials, and corporate retail outlets.

The tenor of the credit under ECLGS 2.0 was five years, including a one-year moratorium. Companies with dues of Rs 50-500 crore as on February 29, 2020 were eligible, as announced by Sitharaman.

The ceiling for outstanding credit was increased from Rs 25 crore to Rs 50 crore under ECLGS 2.0.

The Finance Minister also announced that the ECLGS 1.0 and ECLGS 2.0 would be valid till March 31, 2020.

What is ECLGS 3.0?

In order to support the Hospitality, Travel and Tourism, Leisure, and Sporting sectors, which are among those most affected by the Covid-19 pandemic, the government on March 31 widened the scope of the Rs 3 lakh crore schemes by announcing ECLGS 3.0.

Under ECLGS 3.0, business enterprises in the hospitality, travel and tourism, leisure and sporting sectors would be able to avail credit under the scheme.

It also extended ECLGS 1.0 and ECLGS 2.0 by another 3 months, along with ECLGS 3.0, to June 30, 2021.

ECLGS 3.0 involves the extension of credit of up to 40 percent of the total credit outstanding across all lending institutions as of February 29, 2020, from 20 percent earlier.

The tenor of loans granted under ECLGS 3.0 is six years, including a moratorium period of two years. The scheme will only consider loans less than 60 days overdue as on February 29, 2020, with total credit outstanding not exceeding Rs 500 crore.

The scheme provides 100 per cent guarantee coverage for additional working capital term loans up to 20 per cent of the outstanding credit.

Only those MSME borrowers with outstanding loans of up to 50 crore as of February 29, 2020 and turnover of up to 250 crore for FY 2019-20, were eligible.

Further, the Finance Minister underlined that the country is expected to grow at 9.2 per cent in the current financial year, on the back of a sharp rebound in the economy.

Extension of Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023

Union finance minister Nirmala Sitharaman, in her Budget 2022 speech, announced the extension of Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023. Presenting her fourth Budget, Union Minister Sitharaman had said the cover of the scheme will be expanded by 50,000 crore to 5 lakh crore. An additional amount has been earmarked exclusively for hospitality, related sectors and the government will take steps to make the MSME (Micro, Small and Medium Enterprises) sector more resilient, she added. The government had launched the scheme in view of the Covid-19 pandemic to provide credit facilities to business enterprises, small and medium businesses (MSMEs). In September last year, the Centre had expanded the funds allotted under ECLGS from 3 lakh crore initially to 4.5 lakh crore and also extended the scheme until March 2022. The scheme provides 100 per cent guarantee coverage for additional working capital term loans up to 20 per cent of the outstanding credit.

Only those MSME borrowers with outstanding loans of up to 50 crore as of February 29, 2020 and turnover of up to 250 crore for FY 2019-20, were eligible. The Finance Minister underlined that the country is expected to grow at 9.2 per cent in the current financial year, on the back of a sharp rebound in the economy.