Guaranteed Emergency Line of Credit

Last updated by Jai on June 25, 2020

Emergency Credit Line Guarantee Scheme of Rs. 3 lakh crore


  • The Scheme is a specific response to the unprecedented situation COVID-19. To provide relief to the MSME sector, enabling MSMEs to meet their operational liabilities and restart their businesses.


  • All SCBs are eligible as MLIs. NBFCs which have been in operation for at least 2 years as on 29.2.2020, and FIs will also be eligible as MLIs under the Scheme.


  • The Scheme would be applicable to all loans sanctioned under GECL during the period from May 23, 2020 to 31st October, 2020, or till an amount of Rs. 3 lakh crore is sanctioned under GECL, whichever is earlier.

Guarantee coverage 

  1. 100% credit guarantee coverage by NCGTC.

Eligibility criteria for MSMEs to avail the benefit of the Scheme

  1. Only existing borrower
  2. MSME borrower with combined outstanding loans across all MLIs of up to Rs. 25 crore as on 29.2.2020, and annual turnover of up to Rs. 100 crore in FY 2019-20. 
  3. In case accounts for FY 2019-20 are yet to be audited/finalized, the MLI may rely upon the borrower’s declaration of turnover.
  4. The Scheme is valid only for existing customers on the books of the MLI.
  5. Accounts classified as NPA or SMA-2 as on 29.2.2020 will not be eligible under the Scheme.
  6. The MSME borrower must be GST registered in all cases where such registration is mandatory. 

Borrowers under PMMY?

Loans under PMMY extended on or before 29.2.2020, and reported on the MUDRA portal covered under the Scheme.

Pre – approved loan

This is a pre-approved loan. An offer will go out from the MLI to the eligible borrowers for a pre- approved loan which the borrower may choose to accept. If the MSME accepts the offer, it will be required to complete requisite documentation. 

Borrower having loan accounts with multiple lenders

  1. In case a borrower has existing limits with multiple lenders, GECL may be availed either through one lender or each of the current lenders in proportion depending upon the agreement between the borrower and the MLI.
  2. In case the borrower wishes to take from any lender an amount more than the proportional 20% of the outstanding credit that the borrower has with that particular lender, a No Objection Certificate (NOC) would be required from all other lenders.
  3. No NOC will, however, be required if the GECL availed from a particular lender is limited to the proportional 20% of the outstanding credit that the borrower has with that lender.

Forms of Funding :- 

(i) By way of additional working capital term loans (in case of banks and FIs)

(ii) By way of additional term loans (in case of NBFCs) 

Borrowers not eligible

✓ Loans provided in individual /personal capacity 

✓ Business Enterprises / MSME borrower accounts which had NPA or SMA-2 status as on 29.02.2020 

Interest rate cap

  • For Banks and FIs, one of the RBI prescribed external benchmark linked rates

+1% subject to a maximum of 9.25% per annum

  • For NBFCs, the interest rate on GECL shall not exceed 14% per annum

Tenor of loans/ Moratorium/ Repayment 

Tenor: Four years from the date of disbursement. No pre-payment penalty.

Moratorium period of one year on the principal amount. Interest payable during the moratorium period. The principal shall be repaid in 36 instalments after the moratorium period is over.

Guarantee fee 

NCGTC will not charge any guarantee fee under the Scheme.

Processing fee 

No processing fee shall be charged by lenders.

Additional collateral for the GECL facility

No additional collateral shall be asked by MLIs for additional credit extended under GECL.

Risk weight on credit extended under GECL

Approval of RBI has been requested for assigning zero risk weight to the credit extended under GECL.

Security on credit extended under GECL

The credit under GECL will rank second charge with the existing credit facilities in terms of cash flows (including repayments) and securities, with charge on the assets financed under the Scheme to be created within a period of 3 months from the date of disbursal.

Guaranteed amount payment by NCGTC on invocation of the guarantee

75% of the guaranteed amount will be paid by NCGTC within 30 days of an eligible claim. Balance 25% will be paid on conclusion of recovery proceedings or till the decree gets time barred, whichever is earlier.

Off balance sheet loans provided to MSME borrowers 

The scheme does not cover the off-balance sheet exposure. Only on balance sheet exposures outstanding as on 29th Feb, 2020 are eligible to be covered under the scheme.

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