Guaranteed Emergency Credit Line (GECL) – Clarification regarding Arbitration Proceedings with 52 Imp FAQs

SYNOPSIS

• FAQs updated as on 06.04.2023 by M/S NCGTC Ltd.
• New Addition-FAQ 161 (A) on clarification regarding Arbitration Proceedings

Detailed guidelines on GECL 1.0, GECL 2.0, GECL 3.0 and GECL 4.0 (Canara GECL Jeevanrekha) components of GECL scheme and extension components of the GECL Scheme were initially conveyed. However, the validity of the scheme for fresh sanctions by Canara Bank has already expired on 31.03.2023. 

Now, M/s. NCGTC (National Credit Guarantee Trustee Company Ltd.) has communicated further clarification regarding Arbitration Proceedings under the subject scheme by way of inclusion of FAQ 161 (A).

Frequently Asked Questions (FAQs)

On Emergency Credit Line Guarantee Scheme of Rs. 5 lakh crores

1. What is Guaranteed Emergency Credit Line (GECL)?

The GECL is a loan for which 100% guarantee would be provided by National Credit Guarantee Trustee Company (NCGTC) to Member Lending Institutions (MLIs), and which will be extended in the form of additional working capital term loan facility and non-fund based facility in case of Scheduled Commercial Banks (SCBs) and Financial Institutions (FIs), and additional term loan facility in case of Non-Banking Financial Companies (NBFCs), to eligible MSMEs/ Business Enterprises, individual borrowers in case of the original loan having been for own business and interested Pradhan Mantri Mudra Yojana (PMMY) borrowers.

Credit under GECL would be up to 30% of borrower’s total fund based outstanding credit, excluding off balance sheet and non-fund-based exposures, as on 29.2.2020 or 31.3.2021, whichever is highest.

Credit under GECL would be up to 50% of borrower’s total fund based outstanding credit for Hospitality and related sectors, subject to maximum of Rs.200 crore per borrower.

Click the link at the end of post for more information.

2. What is the objective of the Scheme?

The Scheme is a specific response to the unprecedented situation arising out of COVID-19. It seeks to provide much needed relief to the MSMEs/businesses by incentivizing MLIs to provide additional credit of up to Rs.5 lakh crore at low cost, thereby enabling MSMEs/businesses to meet their operational liabilities and restart their businesses.

3. What is the Emergency Credit Line Guarantee Scheme? 

The Emergency Credit Line Guarantee Scheme provides 100% guarantee coverage by NCGTC to MLIs on GECL of up to Rs.5 lakh crore to eligible MSMEs. MSMEs for the purpose of this Scheme will include MSMEs/ Business Enterprises which are constituted as Proprietorships, Partnerships, Registered Companies, Trusts and Limited Liability Partnerships (LLPs), interested borrowers under PMMY, and also loans to individuals for business purpose.

4. Who are the MLIs under the Scheme? 

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.

5. What will be the definition of FIs for the purpose of this Scheme?

FIs for the purpose of this Scheme will include All India Financial Institutions as defined under sub-clause (i) of clause (c) of Section 45-I of RBI Act.

6. What is the duration of the Scheme? 

The Scheme would be applicable to all loans sanctioned under GECL during the period from May 23, 2020 to March 31, 2023, or till guarantees for an amount of Rs. 5 lakh crores are issued by NCGTC, whichever is earlier.

7. What would be the guaranteed coverage under the Scheme?

The entire funding provided under GECL shall be provided with a 100% credit guarantee coverage by NCGTC under the Scheme. 

8. What will be the eligibility criteria for MSMEs to avail the benefit of the Scheme? 

The eligibility criteria under the Scheme are as under:

• All MSME borrower accounts with combined outstanding loans across all MLIs of up to Rs. 50 crores in any sector and classified as regular, SMA-0 or SMA-1 as on 29.2.2020 or 31.03.2021.
• All MSME borrower accounts with any amount of combined outstanding loans across all MLIs in the Hospitality and related sector and Civil Aviation sector and classified as regular, SMA-0 or SMA1 as on 29.2.2020 or 31.03.2021 or 31.01.2022. 
• All MSME borrower accounts in the 26 sectors identified by the Kamath Committee on Resolution Framework in its report of September 04, 2020 and the Healthcare sector having combined outstanding loans across all MLIs above Rs. 50 crore and not exceeding Rs.500 crore and classified as regular, SMA-0 or SMA-1 as on 29.2.2020 or 31.03.2021. 
• Hospitals/Nursing Homes/Clinics/Medical Colleges/ units engaged in manufacturing of liquid oxygen, oxygen cylinders etc. having credit facility with any lending institution (non-necessarily MLI) and classified as regular, SMA-0, SMA-1 or SMA-2 as on 31.03.2021.
• Borrowers who have availed facility under ECLGS 1.0 and are seeking restructuring as per RBI guidelines of May 05, 2021 (as amended vide RBI Circular dated June 04, 2021). 
• The Scheme is valid only for existing customers on the books of the MLI. 
• The MSME borrower must be GST registered in all cases where such registration is mandatory. This condition will not apply to MSMEs that are not required to obtain GST registration. 
• Loans provided to individuals for own business purposes will be covered under the Scheme.

9. Will the Scheme also cover borrowers under PMMY? 

Yes, loans under PMMY extended on or before 31.03.2021, and reported on the MUDRA portal shall be covered under the Scheme.

10. Will GECL be extended as a separate loan account, or as part of the existing loan account of the borrower? 

A separate loan account shall be opened for the borrower for extending additional credit under GECL.

This account will be distinct from the existing loan account(s) of the borrower.

11. Will loans under ECLGS 1.0 be automatically given without any application or solicitation from the borrower? 

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. Thus, an ‘opt-out’ option will be provided to eligible borrowers under the Scheme, i.e., if the borrower is not interested in availing the loan, he/she may indicate accordingly.

12. Will the interest rate on GECL be capped?

Yes, interest rates on GECL shall be capped as under: 

• For Banks and FIs, one of the RBI prescribed external benchmark linked rates (for MSMEs) and marginal cost-based lending rate (for non-MSMEs) +1% subject to a maximum of 9.25% per annum.
• For NBFCs, the interest rate on GECL shall not exceed 14% per annum.
• For loans to hospitals/nursing homes/clinics/medical colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc.  For setting up on-site oxygen generation plants, rate of interest shall be capped at 7.5% p.a.

The Scheme may also be operated in combination with applicable interest subvention schemes, as far as feasible.

13. Is there any moratorium period prescribed under the Scheme? 

Yes, a moratorium period of one year on the principal amount shall be provided under ECLGS 1.0 & ECLGS 2.0, a moratorium period of two years on the principal amount shall be provided under ECLGS 1.0 (Extension), 2.0 (Extension), 3.0 & 3.0 (Extension) and a moratorium of 6 months shall be provided under ECLGS 4.0. However, borrowers opted for restructuring as per RBI guidelines of May 05, 2021 (as amended vide RBI Circular dated June 04, 2021) have extended tenure as clarified at FAQ 15 above. Interest shall, however, be payable during the moratorium period. The principal shall be repaid in 36 instalments after the moratorium period is over in case of loans covered under ECLGS 1.0 & 1.0 (Extension), in 48 instalments after the moratorium period in case of loans covered under ECLGS 2.0, 2.0 (Extension), 3.0 and 3.0 (Extension) and in maximum 54 monthly instalments under ECLGS 4.0. There shall be no moratorium for non-fund-based facility.

Type of facility	Total repayment period including moratorium	Moratorium period on principal repayment
GECL 1.0 (without restructuring)	4 years	1 year
GECL 1.0 (Extension)	5 years	2 years
GECL 2.0	5 years	1 year
GECL 2.0 (Extension)	6 years	2 years
GECL 3.0 & 3.0 (Extension)	6 years	2 years
GECL 4.0	5 years	6 months

14. What will be the risk weight assigned to the credit extended under GECL?

Zero risk weight be assigned to the credit facilities extended under GECL, as per RBI Circular No. 76/21.06.201/2019-20 dated June 21, 2020. Guarantee cover on non-fund-based facility shall reduce proportionately each year and hence the MLI should apply the risk weight on the outstanding facility accordingly.

15. What will be the security on credit extended under GECL Scheme?

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 or till June 30, 2023, but in any case, prior to the account being classified as NPA.

16. I run a business enterprise and have a GST registration. However, I am not registered as an MSME nor do I have Udyog Aadhar. My Bank also does not classify me as an MSME borrower. Am I eligible under the scheme? 

You are eligible if,

• you have total credit outstanding of Rs. 50 Crore or less as on 29^th Feb 2020 or 31^st March 31, 2021 ; or
• you belong to the 26 sectors identified by the Kamath Committee on Resolution Framework in its report dated September 04, 2020 or the Healthcare sector and the total credit outstanding is above Rs.50 Crore and not exceeding Rs.500 crore as on 29^th Feb 2020 or 31^st March, 2021; or
• you have total credit outstanding of any amount with an eligible MLI as on 29^th Feb 2020 or 31^st March, 2021 or 31st January 2022 and belong to the Hospitality or related sectors or Civil Aviation sector;
• You are a hospital/nursing home/clinic/medical college /unit engaged in manufacturing of liquid oxygen, oxygen cylinders etc.  having credit outstanding with a lending institution and need assistance up-to Rs.2 crore for setting up a on-site oxygen generation plant;
• you have a GST registration or were not required to obtain such GST registration Udyog Aadhar or recognition as MSME is not required under this Scheme; and (vi) You meet other eligibility criteria prescribed under the scheme.

17. Are all NBFCs eligible to become MLIs with NCGTC? 

No. The NBFC must be registered with RBI or NHB, should be meeting the CRAR/prudential norms prescribed by RBI/NHB and have been in lending business for at least two years as on 29^th Feb 2020. The Managing Committee of the Scheme may prescribe additional qualification criteria from time to time.  

18. What is the process of issue of Guarantees under the scheme?

As per the system developed by us for issue of guarantee under ECLGS, once a lender enters the details of the loan sanctioned to an eligible borrower as per the scheme guidelines, the system shall approve the guarantee automatically and will provide Application Reference No. and Credit Guarantee Number to the lender, which shall be used by the lender for later references.

No documents are sought at the time of application lodgement of guarantee, except in the case of individual loans where a management certificate certifying that the original loan was for business purposes.

19. What would be the risk weight assigned to loans provided guarantee cover under the scheme?

Zero risk weight is to be assigned to the credit facilities extended under the scheme, as per RBI Circular No. 76/21.06.201/2019-20 dated June 21, 2020.

Guarantee cover on non-fund-based facility shall reduce proportionately each year and hence the MLI should apply the risk weight on the outstanding facility accordingly.

20. I run my business as a Society/ HUFs. Am I eligible under the scheme of ECLGS?

Yes, all legal entities are eligible. Association of Persons is not a legal entity and hence not eligible for assistance under ECLGS.

21. Whether individuals are covered under ECLGS, if they are MUDRA borrowers?

Yes, they are eligible, provided they meet the other eligibility norms of the scheme, and the lender should have reported loans extended by it on the Mudra portal.

22. In case of MUDRA borrowers, if the total outstanding after support under ELGS exceeds the limit of Rs.10 lakh as specified for MUDRA borrowers, will they continue to get cover under Credit Guarantee Fund for Micro Units?  

Yes, the additional loan would be covered under NCGTC’s ECLGS, while the original loan would continue under CGFMU as previously covered.

23. Whether projects under implementation (who have not yet started commercial operations or have not completed one year of commercial operations) eligible for coverage under the scheme?

No restriction has been imposed for such types of units as they would also have been impacted by the pandemic and may suffer time and cost overrun. The concerned MLI should ensure overall eligibility under the scheme.

24. Whether individuals are eligible for assistance under the scheme?

Yes, business loans availed by individuals for their own businesses/proprietorship concerns shall be eligible under ECLGS 1.0/1.0(Extension)/3.0/3.0(Extension). However, the MLI shall have to submit a suitable Management Certificate at the time of lodgement of guarantee application.

25. What would be the procedure for filing and settlement of claims under ECLGS ?

NPA Marking:

NPA marking module is available on portal under Claim & Settlement, wherein provision is made for NPA marking. MLI needs to mark NPA within 90 days of the account being classified as NPA or date of Supreme Court order (March 23, 2021), whichever is later.

Interim Claim:

The MLI shall furnish the details of the account which would include date of NPA, amount in default, status of legal action etc. in the claim lodgement page available on the portal. The MLI may also be required to upload Management Certificate certifying certain details about the account. On submission of this claim, an e-mail shall go to the MLI that their claim has been lodged and NCGTC would initiate action to approve the claim request and arrange to pay 75% of the amount in default within 30 days of the claim date provided all requisite documents are submitted and the claim is found to be in order and complete in all respects. This shall be treated as Interim Claim. In view of the fact that date of default for facilities under non-fund-based assistance could be on different dates, multiple interim claims shall be allowed to the MLI.

The MLI shall also furnish details of the recoveries made in the account and after adjusting such recoveries towards default amount relating to first charge and the legal costs incurred by them, remit the balance amount to NCGTC within 30 days, failing which MLI shall be required to pay the recovered amount along with interest at 2% over and above the prevailing repo rate from the date of recovery to the date of payment.

Final Claim:

On completion of the recovery Proceedings or till decree gets time barred, whichever is earlier, the MLI shall submit its claim for the balance 25% of the amount in default (net of recoveries, if not already remitted as above). Procedure for settlement of this Final Claim shall be the same as that of Interim Claim except that in the case of loans to individuals, Management Certificate shall be replaced by Statutory Auditor’s certificate.

26. I am an eligible borrower having availed loan under the scheme. Till which date can I avail disbursement?

Sanction under ECLGS is valid up to March 31, 2023 and disbursement out of fund based facility can be availed up-to June 30, 2023. Facility under non-fund -based portion can be availed during the 5/6-year tenor of facility sanctioned provided the first tranche has been utilized on or before June 30, 2023.

27. Are Self Help Groups eligible for assistance under ECLGS?

No.

28. Subsequent to the account turning NPA, when would legal action be considered as initiated on the part of MLI?

Mere issue of recall notice shall not be construed as initiation of legal action. Legal action shall be considered as initiated upon filing of application in Lok Adalat/Civil Court/Revenue State Authority/DRT or after action pursuant to the notice issued under Section 13(4) of SARFAESI Act, 2002 or after admission of application under NCLT or commencement of arbitration proceedings or such other action as may be decided by NCGTC from time to time.

29. Whether an MLI can deny loan solely on the ground that Borrower’s credit rating or Bureau score is below the cut-off decided as per the internal policy of the MLI.

This scheme is designed with specified eligibility criteria and 100% guarantee by GoI. Therefore, coverage from NCGTC is not restricted by borrower’s credit rating or Bureau score.

30. Whether loans to Joint Liability Group (JLG) under MUDRA scheme eligible for assistance under ECLGS?

JLG is not an entity and no loans are extended to JLG per se. Under the JLG model of lending, individuals are given loans and as per the ECLGS guidelines, individuals are eligible.

31. I am an individual running a proprietary concern. Am I eligible for ECLGS facility both as a proprietary concern and as an individual?

PAN would be same for the proprietary concern and the individual. If both meet the eligibility criteria of the scheme and original assistance by the proprietary concern was used for business purposes and original assistance by the individual was used as prescribed under the scheme, both would be eligible for assistance under ECLGS but they shall have to apply separately.

32. What will be the security on credit extended under GECL Scheme in respect of small loans?

In continuation of FAQ No.23, it is further clarified that as per decision taken on September 08, 2020, the stipulation for creation of second charge has been waived in respect of all loans up to Rs.25 lakh (outstanding loan on the reference date plus loan sanctioned under GECL), provided the MLI ensures to safeguard the interests of NCGTC and in this regard obtains a suitable undertaking (as per draft format to be provided by NCGTC and hosted/to be hosted on the website) from the borrower.

33. Whether loans given against FDs/Mutual Funds etc. be considered eligible for ECLGS support?

Yes, provided that the various aspects of the scheme guidelines are complied with. The MLI should ensure to create charge /lien on such assets as per the scheme guidelines to safeguard the interest of NCGTC.

34. Whether GECL loans provided under ECLGS are eligible to be restructured without downgrade as per RBI guidelines of August 06, 2020?

No, as only credit outstanding as on March 1^st, 2020 is eligible for restructuring under RBI’s Resolution framework of August 6, 2020.

However, GECL loans are eligible for rescheduling of principal instalments as per RBI guidelines on resolution framework of May 05, 2021 (as amended vide RBI Circular dated June 04, 2021). The same have been explained in later FAQs.

35. What is ECLGS 1.0, ECLGS 1.0 (Extension), ECLGS 2.0, ECLGS 2.0 (Extension), ECLGS 3.0, ECLGS 3.0 (Extension) & ECLGS 4.0

ECLGS-1.0

The scheme for providing 100% Guarantee coverage by NCGTC to its Member Lending Institutions against extension of eligible credit to its existing borrowers whose total credit outstanding (fund based) across all lending institutions and days past due as on February 29, 2020, was up to Rs.50 crore and up to 60 days respectively.

ECLGS 1.0 (Extension)

The scheme for providing additional support to existing borrowers of ECLGS 1.0 or new borrowers eligible under ECLGS 1.0 based on revised reference date of March 31, 2021.

ECLGS-2.0

The scheme for providing 100% Guarantee coverage by NCGTC to its Member Lending Institutions against extension of eligible credit to its existing borrowers in the 26 stressed sectors identified by the Kamath Committee on Resolution Framework and the Healthcare sector whose total credit outstanding (fund based) across all lending institutions and days past due as on February 29, 2020 was above Rs.50 crore and not exceeding Rs.500 crore and up to 60 days respectively.

ECLGS 2.0 (Extension)

The scheme for providing additional support to existing borrowers of ECLGS 2.0 or new borrowers eligible under ECLGS 2.0 based on revised reference date of March 31, 2021.

ECLGS 3.0

The scheme for providing 100% guarantee coverage by NCGTC to its Member Lending Institutions against extension of eligible credit to its existing borrowers in the Hospitality and related sector and Civil Aviation sector whose days past due as on February 29, 2020, was up to 60 days.

ECLGS 3.0 (Extension)

The scheme for providing additional support to existing borrowers of ECLGS 3.0 or new borrowers eligible under ECLGS 3.0 based on revised reference date of March 31, 2021/January 31, 2022.

ECLGS 4.0

The scheme for providing 100% guarantee coverage by NCGTC to its Member Lending Institutions against extension of eligible credit to hospitals/nursing homes/clinics/medical colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc. setting up on site oxygen generation plants.

36. I am an eligible borrower with total credit outstanding across all lending institutions above Rs.50 crore as on February 29, 2020/March 31, 2021/January 31, 2022. Am I eligible for assistance under the scheme of ECLGS?

You are eligible for assistance under ECLGS 2.0/2.0 (Extension) provided you fall in the 26 stressed sectors identified by the Kamath Committee on Resolution Framework or the Healthcare sector, your total outstanding fund -based facility across all lending institutions and DPD as on February 29, 2020/March 31, 2021, was up-to Rs.500 crore and up-to 60 days respectively and you meet the other eligibility criteria prescribed under the scheme.

You are eligible for assistance under ECLGS 3.0/3.0(Extension) provided you belong to the Hospitality and related sectors (including Hotels/restaurants etc., Tourism & Travel sector, Leisure & Sporting etc.) or Civil Aviation sector and have credit facilities with an MLI with DPD of up-to 60 days as on February 29, 2020/March 31, 2021/January 31, 2022.

You are eligible for assistance under ECLGS 4.0, if you are a hospital/nursing home/clinic/medical college/unit engaged in manufacturing of liquid oxygen, oxygen cylinders etc. having outstanding credit facility with any lending institution with days past due up-to 90 days as on March 31, 2021

This is left to the discretion of the MLI.

37. What would the interest rate chargeable be on loans provided under ECLGS 2.0/2.0 (Extension)?

Interest rate has been capped at 9.25% p.a. for Banks and FIs and 14% p.a. for NBFCs. Interest rates for non-MSMEs would be linked to Marginal Cost based Lending Rate (MCLR) while interest rates for MSMEs would be linked to External Benchmark Lending Rate (EBLR), but the cap prescribed should not be exceeded.

However, in case the MCLR exceeds 9.25% during the tenor of the guarantee, a view would be taken by the Management Committee on revising the cap specified.

38. Whether RBI has issued any guidelines on the new scheme ECLGS 2.0, and if so, what are they?

ECLGS 2.0 is not a separate scheme, but a window within the ECLGS scheme launched on May 23, 2020. RBI has previously clarified that all loans sanctioned under Guaranteed Emergency Credit Line (GECL) and covered under ECLGS shall carry zero risk weight. Subsequent to introduction of ECLGS 2.0 within ECLGS, RBI has, in its December 04, 2020 statement, informed about extension of sectors and synergy with ECLGS 2.0 of funds from RBI under on tap TLTRO.

Guarantee cover on non-fund-based facility shall reduce proportionately each year and hence the MLI should apply the risk weight on the outstanding facility accordingly.

39. What is ECLGS 3.0?

ECLGS 3.0 refers to the scheme for providing 100% guarantee coverage by NCGTC to its Member Lending Institutions against extension of eligible credit to its existing borrowers in the Hospitality & related sectors (including Travel & Tourism sector, Leisure & Sporting etc.) and Civil Aviation sector, whose total days past due as on 29.02.2020 / 31.03.2021 / 31.01.2022 was up-to 60 days, irrespective of the amount outstanding.

40. What is eligible credit facility under ECLGS 3.0/3.0 (Extension)?

Under ECLGS 3.0, the borrowers meeting the criteria indicated at FAQ 134 are eligible for additional credit up-to 40% of their total loan outstanding (fund based) as on February 29, 2020, subject to cap of Rs.200 crore per borrower and meeting other norms prescribed under the scheme. 

Under ECLGS 3.0 (Extension), eligible borrowers in the Hospitality and related sectors can avail additional credit up-to 50% of their loan outstanding (total of fund-based facility) as on February 29, 2020 or March 31, 2021 or January 31, 2022, whichever is highest, subject to maximum of Rs.200 crore per borrower. 

Under ECLGS 3.0 (Extension), eligible borrowers in the Civil Aviation sector can avail additional credit up-to 50% of their loan outstanding (total of fund and non-fund-based facility) as on February 29, 2020 or March 31, 2021 or January 31, 2022, whichever is highest, subject to maximum of Rs.400 crore per borrower. However, for airlines, the maximum eligibility shall be 100% of their total credit outstanding (both fund based and non-fund based outstanding, net of ECLGS support already received, if any) as on 29.02.2020 or 31.03.2021 or 31.01.2022,whichever is higher, subject to a cap of Rs.1,500 crore per borrower (of which up to Rs.500 crore to be allowed only subject to proportionate equity contribution by the promoters/owners) and the borrower meeting all the other eligibility criteria. 

Facility by borrowers in the Civil Aviation sector can be utilized either in the form of fund based or non-fund-based or both as per requirement. Facility by borrowers in Hospitality and related sectors can be utilised as fund-based facility only. Such of these borrowers who have already availed assistance under ECLGS 1.0 or ECLGS 2.0 but fall in the sectors specified under ECLGS 3.0/3.0 (Extension) shall be eligible for additional credit under ECLGS 3.0/3.0 (Extension), provided they meet the other terms of the guidelines.

41. What activities are covered under ECLGS 3.0/3.0 (Extension) ?

Eligible activities are businesses in the Hospitality and related sector (all kinds of hotels, restaurants, canteens, caterers, marriage halls, event conference organisers, floriculture products etc.), Travel & Tourism sector ( including travel agents, tour operators, tour assistance activities, adventure tourism and heritage facilities, private bus operators, car repair services, rent-a-car service providers, motor vehicle aggregators ), Leisure & Sporting sector (Entertainment or recreational activities including amusement parks, theatres, spa clinics, beauty parlours/saloons, cinema halls, swimming pools, entertainment parks, bars, auditorium, yoga institutes, gymnasiums, other fitness centres) and Civil Aviation sector (including scheduled and non-scheduled airlines, chartered flight operators, air ambulances,  airports, aviation ancillary services such as ground handling units and supply chain).

42. What shall be the repayment period of loans under ECLGS 3.0 & 3.0 (Extension)?

Under ECLGS 3.0 & 3.0 (Extension), total repayment period shall be 6 years including moratorium period of 2 years on the fund based facility.

43. Whether GECL loans provided under ECLGS are eligible for resolution framework without downgrade as per RBI guidelines of May 05, 2021 (as amended vide RBI Circular dated June 04, 2021)?  

Yes, they are eligible, provided the borrower is eligible under extant RBI guidelines and under ECLGS guidelines. The MLI should ensure to comply with the guidelines stipulated therein to be eligible for claims, if any, and seek rescheduling of principal instalments. That is, total tenor of these loans can be enhanced from the present 4 years to 5 years with only interest payment upto 2 years and principal repayment in 36 monthly instalments thereafter. Borrower may or may not seek rescheduling of the original facilities. However, lenders should ensure comprehensive re-assessment of all facilities of the borrower with a view to enable implementation of viable resolution plan.

44. What is ECLGS 4.0?  

ECLGS 4.0 refers to the scheme for providing 100% guarantee coverage by NCGTC to its Member Lending Institutions against extension of eligible credit facility to existing hospitals/nursing homes/clinics/medical colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc. who have a loan outstanding with a lending institution (not necessarily MLI) and  whose days past due status as on March 31, 2021 was up-to 90 days.

45. What is eligible credit facility under ECLGS 4.0?

Under ECLGS 4.0, eligible credit facility means loans up-to Rs.2 crore to existing hospitals/nursing homes/clinics/medical colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc. and setting up on-site oxygen generation plants.

46. What activities are covered under ECLGS 4.0?  

ECLGS 4.0 covers loans for setting up of on-site oxygen generation plants by hospitals/nursing homes/clinics/medical colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc.

47. What shall be the repayment period of loans under ECLGS 4.0?

Under ECLGS 4.0, both fund-based and non-fund based (only LC for import of capital equipment) facility shall be eligible. For fund-based facility, the repayment period shall be maximum 5 years, including moratorium period of 6 months, from the date of first disbursement. The non-fund-based facility granted for import of capital goods shall be converted into a term loan upon crystallization and shall be repayable within a maximum period of 5 years from the date of first disbursement/utilization out of fund based/non-fund-based facility, subject to other conditions.

48. I am an eligible borrower having availed assistance under ECLGS 1.0 or 2.0. Can I avail assistance under ECLGS 4.0 also?  

Yes. The facility being provided under ECLGS 4.0 should be treated separately. Such of the borrowers who have availed assistance under ECLGS 1.0 or 2.0 and meet the eligibility criteria of ECLGS 4.0 are eligible for assistance under it also. Separate loan account is to be maintained for ECLGS 4.0.

49. We, an eligible MLI, had extended additional assistance to eligible borrowers under ECLGS. Some of these borrowers have turned NPA. Legal action shall be considered as initiated upon filing of application in Lok Adalat… or after admission of application under NCLT or commencement of arbitration proceedings … as may be decided by NCGTC from time to time. Please advise how to file claims for small accounts where accounts are settled by way of arbitration proceedings also.

Arbitration proceedings are not considered as legal action for recovery of dues.

However, a carve out has been provided for low value loans of up-to Rs.10 lakh. For such loans i.e., of ECLGS accounts where the total loan outstanding of a borrower as on 29.02.2020 (as per Bureau outstanding) does not exceed Rs.10 lakh, the filing and payment of interim claim shall be permissible without insistence on initiation of legal proceedings. After filing of an eligible claim, 75% of amount in default pertaining to loan under ECLGS shall be settled for payment by NCGTC. However, the balance amount (25% of amount in default pertaining to loan under ECLGS) shall be paid only after conclusion of recovery proceedings or till decree gets time barred, whichever is earlier. The Bank should, therefore, initiate appropriate legal action for recovery of dues to claim the balance 25% of amount in default.

50. Are award cases under arbitration proceedings eligible for claim settlement process under ECLGS? (161-A)  

The sentence in question above viz. “Arbitration proceedings are not considered as legal action for recovery of dues” stands modified with the following clarification given in 2 sub-heads which may be seen and complied with while applying for claim settlement under arbitration proceedings:

1. Where the recovery mechanism for a debt due attracts the provisions of DRT Act: Where MLIs have an arbitration clause in their lending agreements and the total debt due attracts the jurisdiction and provisions of the DRT Act, any action initiated upon commencement of arbitration proceedings under this category shall not be considered as recovery proceedings as any recovery action which is within the purview of the DRT Act is non-arbitrable and hence claims filed for such action shall not be honoured. 
2. Where the recovery mechanism for a debt due does not attract DRT Act: Where MLIs have an arbitration clause in their lending agreements and do not attract the provisions of the DRT Act in any manner, any action initiated upon commencement of arbitration proceedings shall be considered as recovery proceedings.

It is further clarified that in all arbitration cases under (ii) above, the final claim filed by MLIs will be honoured only subject to the passing of an Award by the Hon’ble Tribunal when the Award passed on merits (excluding settlements, which are not permitted under the Scheme) is duly executed and recovery of money has been made by the MLIs to the satisfaction of NCGTC under the Scheme.  

51. A borrower banking with a lender was SMA 0 or SMA 1 as on 29.02.2020 (initial reference date) and SMA2 or NPA as on 31.03.2021/31.01.2022 (alternate reference dates) or vice versa. The borrower is Standard as on date and is meeting the other eligibility parameters of the scheme. Whether the borrower is eligible for assistance under ECLGS and, if so, what would be the maximum eligible amount ?

Yes, the borrower is eligible for total assistance of up-to 30% of its fund based outstanding as on the eligible reference date (reference date on which it meets the eligibility parameters of the scheme) under ECLGS 1.0/1.0 (Extension) or ECLGS 2.0/2.0 (Extension) and up-to 50% of its outstanding (subject to cap specified) as on the eligible reference date under ECLGS 3.0/3.0(Extension), provided it meets the other eligibility parameters prescribed under the scheme.

52. Who can provide answers to any further queries?  

Please, address your queries/suggestions to ceo@ncgtc.in

(Ref: NCGTC > ECLGS)