Extended ECLGS to cover aviation, others

The government has expanded and extended the emergency credit guarantee scheme announced last year to provide relief to pandemic-hit businesses to cover more sectors, including civil aviation, and provide enhanced support after the second wave.

The expanded Emergency Credit Line Guarantee Scheme (ECLGS) will now cover hospitals, clinics and medical colleges for setting up on-site oxygen generation plants, civil aviation and additional ECLGS assistance — of up to 10% of the outstanding as on February 29, 2020 — to borrowers covered under ECLGS 1.0, the government said.

The ₹500-crore monetary ceiling on loans has been withdrawn, making even bigger borrowings eligible for debt-servicing relief. The total corpus of ₹3 lakh crore for the scheme, however, remains unchanged.


The civil aviation sector will be eligible under the previous version of the scheme, ECLGS 3.0, which had been expanded to cover travel and tourism, hospitality and sporting sectors. Airlines have been seeking assistance after having been badly affected by the pandemic.

Scheme Extended Till September 30
The scheme will now be available for three more months, until September 30. It will end earlier if the Rs 3 lakh crore limit is exhausted. The disbursement period has also been extended by three months to December 31.

“On account of the disruptions caused by the second wave of Covid-19 pandemic to businesses across various sectors of the economy, the government has further enlarged the scope of ECLGS,” a finance ministry statement said on Sunday.

The scheme, first launched in May 2020, provides a government guarantee that allows stressed businesses to take additional loans to tide over working capital issues and make a quick restart as lockdowns are lifted. It now covers nearly 30 sectors.

The upgraded scheme, ECLGS 4.0, will provide full guarantee for loans up to Rs 2 crore to hospitals, clinics and medical colleges for setting up on-site oxygen generation plants. Interest will be capped at 7.5% for these loans.

Borrowers that had availed of loans under ECLGS 1.0 for four years will now be able to extend it for another year. They will only pay interest for the first 24 months and repay principal and interest in 36 months thereafter. Currently, they have to pay interest for the first 12 months and interest and principal for 36 months thereafter.

An additional assistance of up to 10% of the outstanding will also be available to borrowers that had availed of the scheme in the first round.

Industry Lauds Move
The industry had also demanded that quantum be raised to Rs 5 lakh crore, from Rs 3 lakh crore.

“So far, we have sanctioned Rs 2.54 lakh crore of loans under the ECLGS scheme, of which Rs 2.40 lakh crore has been disbursed,” said Sunil Mehta, chief executive, Indian Banks’ Association. “We are confident of reaching more borrowers through this extended scheme.”

Union Bank of India chief executive Rajkiran Rai said, “The civil aviation sector has been added to the 26 sectors already covered under the scheme. We all know it is one of the stressed sectors and needs help. This scheme will also help in supporting MSMEs (micro, small and medium enterprises) and save livelihoods.”

The industry welcomed expansion of the scheme.

“Extension of period of repayment as well as offer of an additional 10% loan will serve MSMEs well,” said Uday Shankar, president, Federation of Indian Chambers of Commerce & Industry. “Removal of the Rs 500-crore cap for eligibility under ECLGS 3.0 and inclusion of the civil aviation sector are also welcome.”