Question

As of September 2020, the rate of interest under the Emergency Credit Line Guarantee Scheme (ECLGS) announced by the Government of India is capped at ______ for banks and financial institutions.
1. 6.75%
2. 8.75%
3. 7.25%
4. 9.25%

Answer 1

Correct Answer - Option 4 : 9.25%

The correct answer is  9.25%.

• As of September 2020, the rate of interest under the Emergency Credit Line Guarantee Scheme (ECLGS) announced by the Government of India is capped at 9.25% for banks and financial institutions. 
• The Emergency Credit Line Guarantee Scheme (ECLGS) was unveiled as part of the Rs 20 lakh crore comprehensive package announced by the Finance Ministry on 13/05/2020, to aid the Micro, Small, and Medium Enterprises (MSMEs) sector in view of the economic distress caused by the COVID-19 pandemic.
• ECGLS was introduced by the government to mitigate the economic distress faced by micro, small and medium enterprises (MSMEs) because of the COVID-19 pandemic by providing them additional funding of up to Rs 3 lakh crore in the form of a fully guaranteed emergency credit line.
• The revised operational guidelines for ECLGS 3.0 will be issued by the National Credit Guarantee Trustee Company Ltd.
• The scheme was expanded to cover 26 distressed sectors through ECLGS 2.0 and was extended till March 31, 2021.

•  Emergency Credit Line Guarantee Scheme 
  • The Union Cabinet approved the Emergency Credit Line Guarantee Scheme in May 2020 and allowed additional funding of up to Rs.3 lakh crores to different sectors, especially Micro, Small, and Medium Enterprises (MSME) and MUDRA borrowers.
  • The scheme is a part of the AtmaNirbhar Bharat Abhiyan which was launched by Prime Minister Narendra Modi to make India a self-dependent country. 
  • Under the ECLGS, all loans sanctioned under the Guaranteed Emergency Credit Line (GECL) facility will be provided with additional credit. However, there are two specifications:
    • The scheme would be applicable for loans sanctioned from the date of announcement of the scheme to October 31, 2020, OR
    • Till an amount of Rs. 3 lakh crores is sanctioned under GECL (whichever happens first)