The Covid-19 pandemic put immense pressure on the banking sector. Lenders and MSMEs faced multiple challenges like a liquidity crisis, high default risks, supply shocks, shortage of labour and non-payments of dues during this Corona crisis. 

The Government of India launched the Emergency Credit Line Guarantee Scheme to help banks and financial institutions offer emergency credit worth Rs 3 lakh crores to qualified borrowers to meet their working capital needs. As of November 12, 2020, 61 lakh borrowers have received around Rs 2.05 lakh crore as loans.

The Emergency Credit Line Guarantee Scheme includes a pre-approved credit sanction of 20% of the borrower's total outstanding credit of up to Rs. 50 crore as of February 20, 2020, and an annual turnover of up to Rs. 250 crore for the financial year 2019-20, with no additional collateral required. The term of the loans will be four years from the date of disbursement, plus a one-year moratorium duration. Individuals such as physicians, chartered accountants, and lawyers, among others, are entitled to take out loans for professional purposes in addition to MSMEs.

The GOI extended the Scheme until March 31, 2021, as part of the AatmaNirbhar Bharat reforms, and included 26 stressed sectors as beneficiaries, including aviation, power, construction, roads and real estate, and healthcare.

Companies that owe between Rs. 50 and Rs. 200 crores in debt as of February 29, 2020, are eligible to apply. The additional credit would have a five-year term, with a one-year moratorium. The scheme, which aims to help the Indian economy, will help MSMEs manage liquidity crises, create job opportunities, and revive their companies.