Centre raises credit limit under ECLGS

Context

The government has modified the collateral-free emergency credit line guarantee scheme (ECLGS) extending the cheaper loan facility to the civil aviation sector to tide over their current cash-flow problems.

The new limit

• It decided to enhance the maximum loan amount eligibility for airlines under ECLGS to 100% of their loan outstanding or ?1,500 crore, whichever is lower, and of the above, ?500 crore shall be considered, based on equity contribution by the owners.

What is Emergency Credit Line Guarantee Scheme?

• The ECLGS, initially launched in 2020 to provide cheaper loans to micro-small and medium enterprises (MSMEs) during the pandemic period was to expire on March 31, 2022.
• In the Budget 2022-23, the government not only extended the scheme for one more year till March 2023 but also extended its corpus and scope.
• Under the Scheme, 100% guarantee coverage to be provided by National Credit Guarantee Trustee Company Limited (NCGTC) for additional funding of up to Rs. 3 lakh crore to eligible MSMEs and interested MUDRA borrowers.