ECLGS Scheme Extended Till March 2023, FM Says In 2022 Budget Speech

The ECLGS was announced as one of the key components of the Rs 2 trillion economic stimulus package under the 'Aatmanirbhar Bharat Abhiyan' in May 2020. It offers additional working capital finance in the form of a term loan to MSMEs and professionals.

Budget 2022: The government has extended the Emergency Credit Line Guarantee Scheme (ECLGS) for Micro, Small & Medium Enterprises (MSMEs) till March 2023. The announcement was made by Finance Minister Nirmala Sitharaman on February 1, while presenting her fourth annual Budget 2022. The guaranteed cover will be expanded by Rs 50,000 crores to total cover of Rs 5 lakh crores.

The ECLGS was announced as one of the key components of the Rs 2 trillion economic stimulus package under the 'Aatmanirbhar Bharat Abhiyan' in May 2020. It offers additional working capital finance in the form of a term loan to MSMEs and professionals. Initially, its corpus was Rs 3 trillion, but was eventually raised to Rs 4.5 trillion during the second Covid pandemic wave. In September 2021, Ministry of Finance had extended the timeline of ECLGS to March 2022.

Welcoming the government's decision of extending the ECLGS for MSMEs, Vikesh Agrawal CEO of AjvaFintech said the proposed CGTMSE revamp will help the micro sector, which could not avail ECLGS earlier because they did not have existing credit outstanding.

"There has been concentrated efforts in the budget to fill the much-needed credit gap for the stressed sector ELCGS extension specially for the struggling hospitality sector was much needed, the sector however, will take some more time to revive, unlike other sectors. The proposed CGTMSE revamp will help the micro sector, which could not avail ECLGS earlier because they did not have existing credit outstanding, which was the basic requirement for availing ECLGS. PLI extension to more sectors and increased fund allocation shall boost the MSME being backward linked," he said.

"Payment delays have been a big challenge for MSME for government procurement, 75% bill payment within 10 days is a welcome step. Also steps on going paperless, digital acceptance of invoices are good steps in digitizing the value chain," he added.

Who is eligible under the ECLG Scheme?

• Enterprises with a turnover of up to Rs 250 crore (FY 2019-20) with outstanding loans up to Rs 50 crore, as of 29 February, 2020
• GECL credit provided will be up to 20 per cent of the borrower's total outstanding credit as of 29 February, 2020.

How does the ECLG scheme work?

1. The ECLGS initially had a repayment period of four years. However, the limits were revised.
2. After the changes, outstanding credit was increased from Rs 25 crore to Rs 50 crore. Also, the annual turnover amount was raised to Rs 250 crore from Rs 100 crore. A condition for availing this loan was that the account should not be 60 days past its due as of 29 February, 2020.