Are You struggling for Workingcapital finance?Get Loan fromBankunder ECLGS withoutadditionalsecurity

Added: 2026-06-03

[00:00:04]Today we are going to see the another very interesting operating guidelines issued by the central government that is in the form of emergency credit line guarantee scheme that is ECL GS.

[00:00:22]So this is uh issued by central government to save the MSME and non MSME units including airline sector. So it's a very very important settler issued by central government due to the west crisis because lot of units are suffering like anything. So to save them the central government wants to fund the uh fund those units in the form of additional working capital. Here we are going to discuss about the highlights of this emergency credit line guarantee scheme. So the views expressed by me here is all my views. For clear and proper understanding please read the operational guidelines issued by government. uh I am not responsible for any wrong interpretation based on this presentation. This is issued for the benefit of CA members and students.

[00:01:21]So have you a while working capital limit that is in the form of fund based working capital which includes cash credit overdraft working capital demand loan working capital term loan bill discounted packing credit loan etc. But any fund based on the working capital loan are covered by this ECLGs and this is applicable for the MSM and non MSM other than the airlines sector.

[00:01:59]For airline sector they have included the working capital that is apart from the fund based they have included non-fund based loans also for MSM and nonsme other than airline sector only fund based working capital limits are eligible but for airline sector the government has considered fund based and non-f fund based this is a difference and are you facing the financial problems because the your client may be facing the financial problems due to the working capital shortage. So due to the reason of West Asia crisis that is war and the government wants to support all MSME and non MSME units including airline sector and they want to provide uh the additional working capital term loan. It is not working capital limit. It is working capital term loan for business purpose and the government has instructed member lending institutions to help all those units and to navigate from the prevailing the economic challenges more effectively that is to promote the stress that has uh that has been created due to West Asia crisis.

[00:03:17]It's a very good scheme and it will definitely help almost all the MSME non MSME including airline sector. It's a welcome one. The only one thing is that all the parties of MSME and non MSME they have to approach the member lending institutions immediately. That is the very very important thing. And here is the scheme that we are going to discuss here. So before going to that what are who are all called as member lending institution that is scheduled commercial banks scheduled urban cooperative banks NBFC registered with RBI financial institutions as defined in 45 of RB act of 1934.

[00:04:05]So the scheme says that EC here hereafter we are going to say the ECLGS scheme. So the scheme is being managed by National Credit Guarantee Trusty Company Limited which is called as NCTTC and NCTTC is a only old company of Department of Financial Services, Ministry of Finance, Government of India, Asset Trustee. So that means the finance department ministry of finance has created as a has uh uh created the uh company of NCG.

[00:04:44]The purpose of the main scheme is that they want to provide because the MLI member lending institutions are providing loans additional working capital limits to MSME and non MSME including airlines sector. So without uh any collateral they will not sanction but the central government through ministry of finance is going to provide 100% guarantee for the additional working capital limit only for the towards the MSME and uh thing and for the nonSME and airline sector the the company pro that is the trust trustee company provides only 90% guarantee to MLAs to the L MLA that is member lending institutions.

[00:05:35]This scheme comes into effect immediately from 85 2026. The duration of the scheme they are saying that this is a duration that is they can sanction the loan from 85 2026 to 31327 or till the guarantee amount of rups 2 lak 55,000 crores whichever is earlier that is before 31327 or the exhaustion of guarantee amount of 2 55,000 crores whichever is earlier Till such time the load under this EC uh EC LGS is being sanctioned. The entire dispersement after sanction has to be completed on or before 3627 for fund based advance and non-fund based advance. For non-fund based advance at least first reach must be utilized. So this is the duration of the scheme. This is my view on reading this operational guidelines that the trust is given more to airline sector because airlines sector they are going their demand for tours alone will be more. So my sincere advice to the uh clients of yours that is for MSME nonSme please approach the bank or MLIS that is member lending institutions immediately if the funds have been exhausted the MSMES and non MSMES will definitely get only a less share so the observation during this the demand for airline sector is more so MSMES has to have to rush to a benefits Please instruct your clients that is MSME and non MSME units. Please approach the ML MLIS to avail the more benefits for all the eligible eligible borrowers for MSME non MSME uh except airlines. So we are going to discuss who are all eligible borrowers and all business enterprise including MSME being a fund based working capital limits from MLI as on 31320s that is the borrower should be an ex existing one and he should have they should have aviled fund based working capital limits and as 31326 all the existing business enterprises are eligible to get this benefit under ECLGs.

[00:08:15]So, but they say that all the eligible standard SMA0, SMA 1 customers are only eligible and if the borrowers has already been classified under SMA 2 that is special mention account two are not eligible to be covered under this scheme. So the borrowers already avoid actual in case if the borrower has already aviled actual credit facility under credit guarantee scheme for exports they are not eligible to the extent they have already a suppose if they aviled credit guarantee to the extent of 80 crores and if the eligible uh limit is 100 crores only 20 crores they are eligible to get the benefit under this scheme. So non MSM in the sector are eligible that is all the non non MSMB sector is also eligible but the government has given that is operational as guideline has given some negative list but for those negative list units are not eligible to get the benefit of ECLGs that is all NBFCs power generation uh transmission distribution companies telecom service providers Sugar and ethanol manufacturing companies, information technology companies, paper and paper product companies, educational institutions and beverages excluding tea and coffee and hubah are covered under the negative list. So all the if your client has are following in this negative list they are not eligible to get the benefit of ECLGs.

[00:10:00]So here for the uh in case some of the borrowers have got both uh uh they are doing various kinds of business. So what some may be in the positive list some may be in the negative list. So based on the turnover the negative list eligibility and positive list eligibility are being calculated and proportionate to the turnover they say that it is not loan the guidelines says it is proportionate based on the proportionate turnover the eligibility will be arent. So this is the thing you have to remember and overall called eligible borrowers. So that's a very very important thing airline sector eligible borrowers under the airline sector u that is only only for scheduled passenger airline sector. So that means cargo airlines are not covered under this scheme. So here they should have the outstanding limit that is credit facilities for both fund based and non-fund based they should have aviled from MLIS as on 31326 so and those airline sector loans should be classified as standard and not SMA2 that means standard SMA0 SMA 1 are allowed but if the loan has been classified as SMA2 as 313 326 they are not eligible to be covered under this scheme. So now what are the loan eligibility? Now we are we have seen the eligible borrowers. Now we are going to see the eligibility. What's the eligibility? They say they say that for MSME and non MSME except airline sector. So up to 25 20% of up to 20%. So if the bankers are MLIS they want to sanction 10%.

[00:11:58]It is also possible the the operational guidance says it is up to 20% of peak working capital peak fund based working capital during the fourth quarter that is 1 26 to 313 26 both the days have been included so up to 20% of the B fund based working capital or the eligible uh loan category and for each and every MSME non MSME excluding airlines sector The maximum loan for per borrower is 100 crores but some borrowers may would have received the loan from various banks.

[00:12:38]All the MLAs you have to put together all the MLAs it is only only up to 100 crores per borrower are eligible to get the benefit under this scheme. So the what is the peak working capital utilization that is highest level of working capital usage by the borrower during the fourth quarter of financial year 202526 benchmark for calculating eligible additional funding that is the unit should be in existence on 31326 the to consider the benefit or the scheme the they have to consider only the peak credit peak benefit available under the uh uh scheme for the last quarter only.

[00:13:25]Next one is only the benefits are available only for the regular sanction limit. Sometimes the customers would have received ADOC limits those limits are not covered under this scheme. So now we are going to see the loan eligibility for airline sector up to 100%. So for MSME and non MSME other than airlines sector they are eligible to get only 20% of the working capital fund based but here for sector they are said that the they can get additional 100 additional limit that is up to 100% of the working capital that is total P credit for both fund based and non-f fund based and the peak credit of the fourth quarter has to be considered. So this is the difference between MSME and NOMS and airlines sector. So for MSME non MSME you are eligible to get only 20,000 and for airlines sector it is 100%. That is why I in my view that is the they want to save the government wants to save the airlines sector because airlines sector suffered a huge loss. So to come out of that the government is supporting more uh for the airlines sector. So the benefit of additional fund based and non-f fund based is 100% total pre credit and here they say that for the MSME and non MSME it is 100 crores but for here they say that up to,500 crores uh that is put together all the MLAs that is loans received from MLAs you can consider so up to,500 cr per borrower they can give but if the amount goes beyond,000 crores and up to,500 crores.

[00:15:14]It will be permitted only when the equal contribution suppose if the uh if the airlines sector wanted 1,200 crores beyond 100 crores it goes there that is 200 crores. So to the equal equity contribution equal amount of 200 crores has to be brought into by the airline sector then the benefit under this game exceeds I mean they can sanction up to 200 crores. So this is a very very uh interesting area. So here adopt limits ailed by the alien sectors will not be considered only the regular limits are passed. So this is a very very important thing for MSME and non MSME other than other than island sector you can get only 20% of fundbased working capital limit for a sector they can get 100% of fund based and non- fund based this is the difference so and you have to consider only the peak credit avdiled during the fourth quarter of the financial year 2526 Whether additional security has to be provided no it is not required so not to be insisted for MSME and non MSME except the Aine sector but no fresh collateral personal or corporate grantee shall be sought for the uh scheme except for airline sector. So if you are a MSME unit and if you non MSME unit uh you need not provide any fresh collateral to avail the benefits of emergency credit line guarantee scheme. So whether MOD is required MODT the loan has to be released immediately the facility under the scheme the it's only a second charge to the existing credit facilities. So MLS can create charge on the existing securities both primary and collateral and on assets created out of the loan under ECGLS uh 5.0 go within 90 days from the date of the first depart dispersement. That means as on the date of dispersement the MLS need not insist for the creation of commodity but this amodity has to be created within 90 days from the date of his first dispersement. Is there any charge? No any charges to be uh paid by the borrower to MLS. No processing fee has to be charged by the MLS. No guarantee fee has to be charged by NCGTC. So it's a very very important thing. You you need not pay any charges to MLS. Now we are going so okay sir we have a now we have to repay the loan.

[00:18:07]What is the uh what are the conditions?

[00:18:12]So from the data first discussion they have classified the repayment of two into two parts. One is applicable for MSME and non MSME excluding the airline sector that is 5 years from the date of first dispersement including holiday period or mortoriium period of 1 year that is first year is called as holiday period and or moratorium period after that it is 4 years. So the as for the bank's terms and conditions you have to repay the loan within a period of 5 years which includes holiday period or monetary period of one year. For airline sector they say that the loan has to be repaid within 7 years and the holiday period and moratorium period given to a sector is 2 years. So the benefits are more for the island sector when compared to MSME or non MSME sectors. So this is the term for MSME non MSME the loan has to be repaid within a period of 5 years including one year as the holiday period and for airline sector it is 7 years including monetary period of 2 years in case if the borrower has re repaid the loan at the earlier whether the prepayment charges has to be charged no it should not be charged no prepayment charges for earlier payment repayment of the loan under the scheme Can a new borrower is eligible? Suppose a borrower has come has a loan from the banking from the MLAs after 31326 whether they are eligible to get the loan. No. All the existing borrower on the books of MLIS as of 31326 are eligible to get the benefits under emergency credit line guarantee scheme.

[00:20:09]whether charge has to be created on the collateral loan for the unsecured loans because sometimes the loans has been sanctioned under credit guarantee scheme. So in that there is no collateral security. So no there is no need for the bankers to create additional charge uh there is there is no charge is required to be created or extended because there is no mod for the for those loads. What's the interest?

[00:20:38]Yes, now the loan is repaid. I I'll repay the loan. What is the interest rate? The for the both the MSME sector and non MSME sector the maximum interest rate is 9%. So here for MSME they consider that external benchmark lending rate plus 75% with a cap of 9%. That is the maximum interest rate is 9% even if external benchmark lending rate exceeds 9%. The same is also for non MSME and there they say that MCL law for MSME they say that external benchmark lending rate for non MSME marginal cost of funds plus.5% with a cap of 9%. that is maximum interest rate should not exceed 9% even if MCLR exceeds 9. So with refers to the loans MLI given by NBFC the rate of interest should not exceed 13% peranom for airline sector it has to be decided by the board approved policy of the lending so this is the interest rate for MSM 9% maximum forms uh 9% maximum loan sanctioned by NBFC it is the maximum interest rate should not exceed 13% perine the interest rate has to be charged charge has to be designed by the board's policy processor. And we have to service the interest. So as and when the interest is due it has to be serviced during the moratorium period including the moratorium period the interest has to be serviced immediately.

[00:22:21]But for anal sector again they are giving the benefits to alen sector up to 50% of estimated interest of amount of moratorium can be earmarked from the proposed additional egs facility towards.

[00:22:37]So this is a difference service of interest. So benefit of service of interest is more to a sector when compared to MSME and non MSME. This is my uh my view. And now how the borrower has to apply for the benefit under the ECLGs.

[00:22:57]First thing the borrower shall mandatorily apply on the gen samat hotel port hotel by giving self declaration by furnishing the required particulars details in the application form. Here the borrower has to apply on the gen samat portal.

[00:23:17]You please go and approach the mlis.

[00:23:19]they will give the details of uh genat portal and few MLAs they they are started to help the borrowers by themselves they are applying through genat portal on behalf of the borrower I heard and the application will then be processed to the will be forwarded to the lender that is MLIS and they select the borrower based on the application and based on the eligible ibility under the scheme and subject to uh satisfactory evaluation the loan is sanctioned. The sanctioned details have to be uploaded by the lender on Jan samat portal and the same thing shall be shared on realtime basis with NCT. So you have to apply through genat portal. Then the branch has received the genat portal. they consider and they evaluate your eligibility. Then the sanction and this sanction has to be intimated to the borrower as well as to the NCGTC on real time basis. Now release or replacement of yes we have a loan under ECGS. Can the release of existing securities be insisted? No, it should not be insisted and we have to replace suppose if the some of the borrowers wants to want to replace the existing secretary. Yes, it is fermented provided it has to be taken uh it has to be considered by the MLS as per the scheme.

[00:25:04]Okay. Sometimes I have a uh benefit under ECGS.

[00:25:10]Can this loan be taken over by another bank? Yes, it is permitted that is after availing the loan under ECLGs and if the borrower wants to wants to approach another bank to take over yes the new MLIS can take over the loan but the repayment schedule should not be changed. The same thing should be followed. Now there are some borrowers who avail the loan under consortium rules and yes can a single banker and that is can a single member banker can give the loan by adding all the uh banks eligible limit. Yes, it is also permitted. Individual banker they can also consider. Sometimes they can they only one financial institutions they want to institution it wants to sanction uh individual load but in that case they have to get NOC from other membership bank other member banks then it is permitted here. Now the me MLI wants to claim the default amount from the from the NC that is from the national credit guarantee trusty company because their borrower has become a defaulter or has become NPA customer then the bank that is MLI can apply to NCGTC by way of a client. So any loan sanctioned receipt has become NPR default. Then MLA has to apply with the NCGDC and the climb award. It has to produce all the evidences of uh the skiing all the evidences how to get uh all the details they have to uh submit we'll see what all the thing they have to submit that is the the MLS has to submit the sanction letter facility under the scheme loan ledger of the borrower existing facility for the fourth quarter of financial year 202526 loan No ledger of facility under the scheme till date of line indicating date wise outstanding balance. Uh send credit bureau report or data evidencing status of the account on reference state that is AS on 31326 document evidencing the legal action taken. All these details they have to submit to the NCTC at the time of crime of the amount. So MLAs has to follow then the MLS can submit the claim with the NCGDC simultaneously MLS has to follow the loan recovery from the borrower.

[00:28:02]So here this is very very important the some amount of time has been paid by the NCGDC to MLS and after that the loan recovery has come. So the those loan recoveries have has to be have to be uh uh returned to NCGDC otherwise the MLIS has to pay interest uh 4% interest plus repor rate. So repor rate plus 4% interest they have to pay to NCDC till they claim the till they settle the amount. Now how the NCTC release the amount? So on claim application submitted by MLIS the NCGDC first make the payment of 75% that is interim relief of the amount of default within 30 days of claim that is after scrutiny if the NC the NCGDC is satisfied then they will immediately release 75% of the default amount within 30 days of the claim then recovery process everything is going on then final claim will be final claim of 25% of the guarantee amount will be paid on the conclusion of recovery proceeding that is here after we will not be able to recovery proceedings recovery uh I mean possibilities from the borrower or 3 years from the date of settlement of first claim whichever is earlier so here this is very very important the MLI has to prove that it is not possible for the for them to recover the defaulted or NP amount from the borrower that is the then only the NC DTC will settle the balance amount of 25%.

[00:29:50]So this is what I want to say with the reference to national uh that is on emergency credit line uh guarantee scheme. So it is my sincere request. Please approach your MLA member lending institution. If you avoid any working capital fund based limit from the banks for example you please immediately go and approach them. You will get 20% of P credit that you have aired during the last quarter of 313 2026. That is from 126 to 31326.

[00:30:30]And for if you are in airline sector then you will get 100% of P credit so that is the important thing. So the MSMES and non MSMES and including airlines sector will be benefited out of this uh emergency credit line guarantee scheme thanks to the ministry of finance to issue and save the face value of all the MSMES and non MSMES including islands. Thank you very much for patiently watching this program. Nandri