The central government has announced the second iteration of the emergency credit-linked guarantee scheme to support 26 stressed sectors and healthcare firms. Banks will be able to provide collateral-free, fully guaranteed loans to borrowers, on capped interest rates. The scheme will be available till March 31, 2021.

KV Kamath committee in September 2020 identified these 26 stressed sectors. The panel, constituted by the Reserve Bank of India, created the list of stressed sectors after the Covid-19 pandemic and the national lockdown affected businesses across the across the country. The purpose of the committee was to create sectorial benchmarks that banks can use to decide whether a borrower deserves to have debt restructured. The government has added the healthcare sector to the list of those which can benefit from ECLGS 2.0.

ECLGS 2.0 aims to support companies with outstanding dues of Rs 50-500 crore as on Feb. 29. It will also cover micro, small and medium companies with outstanding dues below Rs 50 crore that were granted support under the first version of the scheme.

Unlike the first iteration, the government has not placed any turnover cap for companies to be eligible. Firms that had remained in default for up to 30 days as on Feb. 29 can access emergency funding from banks.

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