{Emergency Credit Line Guarantee Scheme [ECLGS]}
Purpose
The scheme is in line with the Government’s guarantee scheme – ‘Emergency Credit Line Guarantee Scheme’ (ECLGS) to provide relief/liquidity support to MSMEs/Business Enterprises affected by the Covid pandemic.
Eligibility
· Under UGECL1.0, all borrower accounts pertaining to Business Enterprises /MSMEs/Loans to individuals for specific businesses purposes (as specified in the FAQs) with total credit outstanding (fund based only) across all lending institutions of up to Rs. 50 crore as on 29.2.2020 are eligible. MLIs are expected to check with credit bureau the overall outstanding of the borrower to assess the eligibility of the borrower. To be eligible under ECLGS 1.0, the Borrower accounts should be less than or equal to 60 days past due as on 29th February, 2020 in order to be eligible under the Scheme. i.e. they should not have been classified as SMA 2 or NPA by any of the lender as on 29th February, 2020.
· Under UGECL1.0 (Extension), all borrowers who have availed assistance under ECLGS/UGECL 1.0 or new businesses which are eligible under UGECL 1.0 based on the revised reference date of 31.03.2021 and meet the other terms of the guidelines are eligible.
· Under UGECL 2.0, all Business Enterprises /MSMEs in the 26 Covid related stressed sectors identified by the Kamath Committee on Resolution Framework and the Healthcare sector who have availed loan for business purposes with total credit outstanding (fund based only) across all lending institutions above Rs.50 crore and upto Rs.500 crore as on 29.02.2020 are covered. To be eligible under ECLGS 2.0, the borrower accounts should be less than or equal to 60 days past due as on February 29, 2020 i.e. they should not have not been classified as SMA 2 or NPA by any of the lender as on 29th February 2020.
· Under UGECL2.0 (Extension), all borrowers who have availed assistance under ECLGS/UGECL 2.0 or new businesses which are eligible under UGECL 2.0 based on the revised reference date of 31.03.2021 and meet the other terms of the guidelines are eligible.
· Under UGECL 3.0, all Business Enterprises /MSMEs in the Hospitality (hotels, restaurants, marriage halls, canteens etc.), Travel & Tourism , Leisure & Sporting and Civil Aviation (including scheduled and non-scheduled airlines, chartered flight operators, air ambulances and airports) sectors whose days past due are upto 60 days as on 29.02.2020 are eligible· Under UGECL3.0 (Extension), all borrowers who have availed assistance under ECLGS/UGECL 3.0 or new businesses which are eligible under UGECL 3.0 based on the revised reference date of 31.03.2021 and meet the other terms of the guidelines are eligible.
· Under UGECL 4.0, all existing hospitals/nursing homes/clinics/medical colleges who have a credit facility from a lending institution with days past due upto 90 days as on 31.03.2021 are eligible for assistance of upto Rs.2 crore for setting up low cost technologies like Pressure Swing Adsorption for on site oxygen generation
· Loans provided to Business Enterprises / MSMEs constituted as Proprietorship, Partnership, registered company, trusts and Limited Liability Partnerships (LLPs) or any other legal entity shall be eligible under the Scheme. As per decision taken on August 03, 2020 (by NGCTC), loans provided to individuals for business purposes under ECLGS 1.0/ UGECL 1.0 shall also be eligible under specified categories.
· For the purpose of UGECL 1.0, Business Enterprises / MSMEs would include loans covered under Pradhan Mantri Mudra Yojana extended on or before 29.2.2020 and reported on the MUDRA portal. All eligibility conditions including the condition related to Days past due would also apply to PMMY loans.
· Loans provided in individual capacity are covered under UGECL 1.0 However, such loans should be restricted to business loans taken by individuals for their own businesses and should be supported with a Management Certificate to this effect at the time of guarantee application. These loans should also meet the other eligibility criteria of the scheme.
· Days Past Due status as on 29.2.2020/31.03.2021 to be checked across all lending institutions from credit bureau while availing assistance under ECLGS.
· All borrower accounts which had NPA or SMA-2 status as on 29.2.2020 shall not be eligible under UGECL or ECLGS 1.0, ECLGS 2.0 and ECLGS 3.0. Similarly, all borrower accounts which had NPA or SMA-2 status as on 31.03.2021 shall not be eligible under UGECL or ECLGS 1.0 (Extension), ECLGS 2.0 (Extension) and ECLGS 3.0 (Extension). All borrower accounts which had NPA status as on 31.03.2021 shall not be eligible under UGECL 4.0 /ECLGS 4.0. However, as per decision taken on September 08, 2020, exception has been allowed for overdues of the borrower in respect of their credit card/savings account/current account provided the said overdues did not exceed 1% of the loan amount (i.e. GECL amount) extended under ECLGS facility and that the overdue amount were regularized prior to assistance being extended under ECLGS and provided further that the member lending institutions ensure that the overdues were covered by the materiality concept being followed by the MLIs.
· Business Enterprises / MSME borrower must be GST registered in all cases where such registration is mandatory. This condition will not apply to Business Enterprises / MSMEs that are not required to obtain GST registration.
Quantum
a. Under ECLGS 1.0/UGECL 1.0, the amount of funding to eligible borrowers either in the form of additional working capital term loan facility (in case of banks and Financial Institutions), would be up to 20% of their total credit outstanding up to Rs. 50 crore (fund based only) as on 29th February 2020, subject to the borrower meeting all the eligibility criteria.
b. Under ECLGS 1.0(Extension)/UGECL 1.0(Extension), the amount of funding to existing ECLGS1.0/UGECL1.0 borrowers or new borrowers, either in the form of additional working capital term loan facility (in case of banks and Financial Institutions), would be up to 30% (enhanced from the present 20%) of their total credit outstanding (net of support received under ECLGS1.0/UGECL1.0) up to Rs. 50 crore (fund based only) as on 29th February, 2020 or 31st March 2021, whichever is higher, subject to the borrower meeting all the eligibility criteria.
c. Under ECLGS 2.0/ UGECL 2.0, the amount of funding to eligible borrowers either in the form of additional working capital term loan facility and / or non-Fund based facility or a mix of the two (in case of banks and Financial Institutions) would be up to 20% of their total credit outstanding (fund based only) up to Rs. 500 crore as on 29th February, 2020, subject to the borrower meeting all the eligibility criteria. Credit facility under ECLGS 2.0 could be in the form of fund based or non-fund based facility or a mix of the two.
d. Under ECLGS 2.0(Extension)/UGECL 2.0(Extension), the amount of funding to eligible borrowers either in the form of additional working capital term loan facility and/or non-fund based facility or a mix of the two (in case of banks and Financial Institutions), additional term loan facility (in case of NBFCs) would be up to 30% (enhanced from the present 20%) of their total credit outstanding (fund based only net of support received under ECLGS2.0/UGECL2.0) up to Rs. 500 crore as on 29th February, 2020 or 31st March 2021, whichever is higher, subject to the borrower meeting all the eligibility criteria. Credit facility under UGECL 2.0 (Extension) can be in the form of fund based or non-fund based facility or a mix of the two.
e. Under ECLGS 3.0/ UGECL 3.0, the amount of funding to eligible borrowers either in the form of additional working capital term loan facility (in case of banks and Financial Institutions) and additional term loan facility (in case of NBFCs) would be up to 40% of their total credit outstanding (fund based only), subject to a cap of Rs.200 crore per borrower and the borrower meeting all the other eligibility criteria. Such of the eligible borrowers, who are eligible under ECLGS 3.0 and have already availed benefit under UGECL/ ECLGS 1.0 or ECLGS 2.0 shall be eligible for additional credit upto 20% of their total credit outstanding as on 29.02.2020.
f. Under ECLGS 3.0(Extension)/UGECL 3.0(Extension), the amount of funding to eligible borrowers either in the form of additional working
capital term loan facility (in case of banks and Financial Institutions) and additional term loan facility (in case of NBFCs) would be up to incremental credit eligibility based on outstanding of 29.02.2020 or 31.03.2021, whichever is higher.
g. Under ECLGS 4.0/ UGECL 4.0, the amount of GECL funding to eligible borrowers would be in the form of fund based (term loan) or non-fund based (LC for import of capital goods) facility and would be limited to Rs.2 crore per borrower for setting up a low cost on-site oxygen generating plant.
h. Total Outstanding Amount would comprise of the on-balance sheet exposure such as outstanding amount across WC loans, term loans and WCTL loans. Off-balance sheet and non-fund based exposures will be excluded.
Repayment
a. Under ECLGS 1.0/ UGECL 1.0 the tenor of loans shall be four years from the date of first disbursement.
b. Under ECLGS 1.0 (Extension)/ UGECL 1.0 (Extension) the tenor of loans shall be five years from the date of first disbursement.
c. Under ECLGS 2.0/ UGECL 2.0, the tenor of facilities shall be for a period of 5 years from the date of first disbursement of fund based facility or first date of utilization of non-fund based facility, whichever is earlier. To be eligible for guarantee cover of the sanctioned non-fund based facility, first utilization must happen on or before 30.06.2022.
d. Under ECLGS 2.0(Extension)/ UGECL 2.0 (Extension), the tenor of facilities shall be for a period of 6 years from the date of first disbursement of fund based facility or first date of utilization of non-fund based facility, whichever is earlier. To be eligible for guarantee cover of the sanctioned non-fund based facility, first utilization must happen on or before 30.06.2022.
e. Under ECLGS 3.0 & 3.0 (Extension)/UGECL 3.0 & 3.0 (Extension), the tenor of facilities shall be six years from the date of first disbursement.
f. Under ECLGS 4.0/ UGECL 4.0, the tenor of facilities shall be for a maximum period of 5 years from the date of first disbursement of fund based facility or first date of utilization of non-fund based facility, whichever is earlier. Last date of disbursement under fund based facility and utilization of LC under non-fund facility shall be June 30, 2022.
Rate of Interest
Ø The rate of interest under UGECL 1.0,1.0 (Extension) is as under:
MSME: EBLR +1.00 % or 7.50% p.a. whichever is lower.
Others: 1Yr MCLR +1.00 % or 7.50% p.a. whichever is lower.
Ø The rate of interest under UGECL 2.0, 2.0 (Extension) is as under:
MSME: EBLR +1.00 %,or 9.25% p.a whichever is lower
Others: 1Yr MCLR +0.60 %,or 9.25% p.a whichever is lower
Ø The rate of interest under UGECL 3.0, 3.0 (Extension) is as under:
MSME: EBLR +1.00 %, subject to a maximum of 9.25% p.a.
Others: 1Yr MCLR +1.00 %, subject to a maximum of 9.25% p.a.
Ø The rate of interest under UGECL 4.0 is as under:MSME: EBLR + 1.00%, with upper cap of 7.50% p.a.
Others: 1 Yr MCLR + 1.00%, with upper cap of 7.50% p.a.
Processing Charges & Other Charges
Nil
Security
a. The additional WCTL or non fund based facility (in case of banks and FIs) granted under ECLGS 1.0 or 2.0 or 3.0 or 4.0 and ECLGS 1.0 (Extension) or 2.0 (Extension) or 3.0 (Extension) shall rank second charge with the existing credit facilities in terms of cash flows (including repayments) and security, with charge on the assets financed under the scheme to be created within a period of three months (90 days) from the date of disbursal subject to on or before June 30, 2022 or date of NPA, whichever is earlier.
b. No additional collateral shall be asked for additional funding under GECL (UGECL).
Guarantee
The loans sanctioned under the subject scheme shall be covered under ECLGS of NCGTC with 100% guarantee coverage.
Validity of the scheme
Loans under the subject scheme can be sanctioned till 31.03.2022 or till guarantees for an amount of Rs.4.50 lakh crore are issued under ECLGS by NCGTC, whichever is earlier.
Credits – Union Bank of India