Cabinet approves Rs 3 lakh cr emergency credit line for MSME

News: Union Cabinet has approved additional funding of up to Rs.3 lakh crore through introduction of Emergency Credit Line Guarantee Scheme(ECLGS) for MSMEs.


  • Aim: To mitigate the economic distress being faced by about 45 lakh MSMEs by providing them additional funding of up to Rs 3 lakh crore in the form of a fully guaranteed emergency credit line. 
  • Eligibility: All MSME borrower accounts with outstanding credit of up to Rs.25 crore as on 29th February,2020 and with annual turnover of up to Rs.100 crore would be eligible for the scheme.They can get up to 20% fresh loans of their entire outstanding credit.
  • Guarantee: National Credit Guarantee Trustee Company (NCGTC) will provide 100% guarantee against losses on loans advanced to eligible MSMEs and MUDRA borrowers.
  • Duration: The loan will be provided for four years with a moratorium of one year on the principal amount.
  • Interest Rates: The Interest rates under the Scheme are capped at 9.25% for banks and financial institutions and at 14% for non-banking financial companies(NBFCs).

Additional Facts:

National Credit Guarantee Trustee Company(NCGTC):

  • It was set up in 2014 as a private limited company by the Department of Financial Services, Ministry of Finance under the Indian Companies Act,1956.
  • Purpose: To act as a common trustee company to manage and operate various credit guarantee trust funds.