India’s Finance Minister, Nirmala Sitharaman on Thursday announced the Emergency Credit Line Guarantee Scheme-2 (ECLGS 2), which is a guaranteed credit for supporting the stressed sectors.  Emergency Credit Line Guarantee scheme will offer additional credit up to 20% of the outstanding loan extended till March 31, 2021. It involves 100 percent guaranteed collateral-free additional credit at capped interest rates.

Companies in 26 sectors as identified by the Kamath committee and the healthcare sector with credit outstanding of above Rs 50 crores and upto Rs 500 crores can avail the same.  The tenure for the scheme is 5 years, including moratorium of one year on the principal amount. The scheme would be available till March 31, 2021.

The new stimulus measures are intended at providing relief to the Indian economy which is stumbling under the impact of the covid-19 pandemic. Over the past month or so, there were multiple discussions within the central government and with industry bodies and stakeholders leading up to today’s announcement. FM Nirmala Sitharaman also highlighted measures taken by the Centre in the last few months to support economic growth.

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