How Will Rs 3 Lakh Crore Emergency Credit Line (GECL) Work ?

The Rs 3-lakh-crore Guaranteed Emergency Credit Line (GECL) was announced as the relief package for the MSMEs (Micro, Small and Medium Enterprises) as well as other business entities. GECL is said to be cheaper and easy working capital. For the scheme, the government has provided a corpus of Rs 41,600 crore, which will be spread over four years starting with the current fiscal.

Guaranteed Emergency Credit Line (GECL) important Guidelines

GECL – Moratorium on Principal, Interest to be charged during moratorium period

It is clearly defined in the notification released by NCGTC that there will be one-year moratorium on the principal,but interest is payable during the period. The principal repayment terms would be 36 months once the moratorium period gets over.

National Credit Guarantee Trustee Company Ltd (NCGTC) has made it clear that the guarantee fund is not exclusively for the MSMEs rather other businesses that fulfill the eligibility can avail the credit.

GECL Credit Guidelines

1. Banks/ NBFCs are to offer loans up to 20 per cent.

2. The existing loan may be extended up to maximum of 20%.

3. It is advised to the bank/ NBFC, be liberal in sanctioning.

4. The guarantee of the fund will be based on the merit based financing and it is also expected to evaluate credit proposals by using prudent banking judgement.

5. The end utilization, business discretion and due diligence will be verified

6. While selecting commercially viable proposals, the conduct of the account(s) of the borrowers with normal banking prudence will be taken care of.

GECL Eligibility Criteria

1. According to the guidelines, MSMEs or businesses constituted as proprietorship, partnership, registered company, trusts and Limited Liability Partnerships (LLPs) will be eligible under the Scheme.

2. Any existing loan such as vehicle loan taken by an entity will be taken into consideration for calculating Rs 25 crore outstanding, but vehicle loan taken by promoter or director in personal capacity will not be covered.

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Maximum Permissible Finance (MPBF)

The relief scheme intends to provide 100 per cent guarantee coverage for the GECL. It will be a per-approved sanction limit of up to 20 per cent of loan outstanding as on February 29 to eligible borrowers.

1. It is decided that the bank finance eligible for the credit guarantee will be in the form of additional working capital term-loan facility in case of banks and financial Institutions like Public Sector Banks, Private Banks etc.

2. Whereas, in case of NBFCs, it will be considered as additional term-loan facility.

3. The MUDRA loan borrowers can also be included for this credit guarantee with annual turnover of up to Rs 100 crore and outstanding loan up to Rs 25 crore. This is must for the borrower account must be less than or equal to 60 days past due on the prescribed date.

4. A borrower could get credit up to Rs 5 crore. GST registration will be mandatory for borrowers except for those not required.

5. It is also advised to open the separate loan account for extending additional credit under GECL. The tenor of loans will be four years from the date of disbursement. No per-payment penalty will, however, be charged in case of early repayment.

GECL – Emergency Credit Line, Interest rate

NCGTC has fixed the maximum rate of interest for such credit as 9.25% for banks and financial institutions and 14% for NBFCs.


The Guaranteed Emergency Credit Line (GECL) scheme would be applicable to all loans sanctioned under this till October 31st, or till an amount of Rs 3-lakh crore is sanctioned under the GECL, whichever is earlier.

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