The ECLGS moratorium period under ECLGS 5.0 provides a 12-month principal payment standstill within a total loan tenor of 60 months. Check your pre-approved offer online using your registered mobile number and OTP to explore eligibility under Bajaj Finance.
In summary
- The ECLGS moratorium period is a 12-month principal payment standstill during which you pay only interest and no principal repayment is due.
- Under ECLGS 5.0, the total loan tenor is 60 months, comprising a 12-month moratorium followed by a 48-month Dropline EMI repayment period.
- Interest remains payable throughout the moratorium at the contracted rate, which ranges from 7.50% to 13.00% per annum, depending on the approved loan terms.
- The moratorium is automatically built into the repayment structure and does not require a separate application from eligible borrowers.
- From month 13 onwards, the loan transitions to a Dropline EMI structure where both principal and interest are repaid over the remaining tenure.
- Bajaj Finance offers ECLGS funding solutions designed to help eligible businesses manage cash flow requirements while planning repayments effectively. This page covers the ECLGS moratorium period, interest payments, repayment transitions, EMI changes, key benefits, and practical considerations for borrowers.
What is the ECLGS moratorium period?
The ECLGS moratorium period is the first 12 months of an ECLGS 5.0 loan during which borrowers are required to pay only interest while principal repayment remains suspended. This structure is officially known as a principal payment standstill and is designed to reduce immediate repayment pressure on eligible businesses.
Unlike a full loan repayment holiday, the moratorium does not eliminate monthly obligations. Borrowers continue servicing interest every month while the outstanding principal remains unchanged during the standstill period. Once the first 12 months are completed, the loan automatically transitions into a repayment phase where both principal and interest are paid through Dropline EMIs.
Key ECLGS moratorium facts
| Particulars | Details |
|---|---|
| Moratorium duration | 12 months |
| Moratorium type | Principal payment standstill |
| Principal repayment during moratorium | Not required |
| Interest payment during moratorium | Mandatory |
| Total loan tenor | 60 months |
| Repayment period after moratorium | 48 months |
| Repayment structure | Dropline EMI |
| Separate application required | No |
How long is the ECLGS loan moratorium period?
The ECLGS moratorium period is fixed at 12 months from the date of loan disbursal and forms an integral part of the ECLGS 5.0 repayment structure.
Key timelines under the scheme include:
- Moratorium duration: 12 months from the date of disbursal.
- Type: Principal payment standstill where only interest is payable.
- Total loan tenor: 60 months or 5 years.
- Repayment phase: 48 months following completion of the moratorium.
- Repayment method: Principal and interest repaid through Dropline EMIs.
- Scheme structure: The 12-month standstill is part of the ECLGS framework and is not determined on a case-by-case basis by lenders.
Because the moratorium is embedded into the loan structure, eligible borrowers do not need to submit a separate request to avail it. The repayment schedule automatically reflects the standstill period from the beginning of the loan.
Do you pay interest during the ECLGS moratorium period?
Yes, interest remains payable throughout the ECLGS moratorium period.
One of the most common misconceptions is that the moratorium represents a complete repayment holiday. In reality, only principal repayment is deferred. Interest continues to accrue on the utilised loan amount and must be serviced every month.
What happens to interest during the moratorium?
- Interest is charged on the utilised amount and not on the sanctioned limit.
- The contracted interest rate ranges from 7.50% to 13.00% per annum.
- Monthly payments during the moratorium consist only of interest.
- Interest is neither waived nor converted into principal under the scheme.
- Auto-debit instructions through the registered repayment account continue during the moratorium period.
Example
Suppose a manufacturing business utilises Rs. 20 lakh under an approved ECLGS facility. During the first 12 months, the borrower pays only the monthly interest applicable on the utilised amount. The principal balance remains unchanged until the repayment phase begins in month 13.
How does the principal standstill work in the first year?
The principal standstill keeps the outstanding principal unchanged during the first 12 months while borrowers service interest regularly.
This structure helps businesses preserve liquidity and deploy funds into operations before full loan repayments begin.
Month-by-month framework
| Period | Repayment requirement |
|---|---|
| Months 1–12 | Interest only |
| Principal outstanding | Remains unchanged |
| Additional withdrawals | Allowed within approved limits and terms |
| Part-prepayment | Permitted at zero charges |
| Month 13 onwards | Principal plus interest repayment begins |
Benefits of the standstill year
- Lower monthly cash outflow compared to full EMI repayment.
- Improved working capital flexibility.
- Additional liquidity for inventory purchases and business operations.
- Opportunity to generate revenue before principal repayment begins.
- Flexibility to reduce future obligations through voluntary part-prepayments.
The principal standstill is intended to provide businesses with time to deploy capital productively and prepare for the repayment phase.
What happens after the ECLGS moratorium period ends?
The ECLGS loan automatically enters the repayment phase once the 12-month moratorium period concludes.
From month 13 onwards, borrowers begin repaying both principal and interest through Dropline EMIs over the remaining 48 months.
Key changes after month 12
- Principal repayment starts.
- EMI amount increases compared to the first year.
- The available loan limit reduces progressively as principal is repaid.
- Interest is calculated on the declining outstanding balance.
- The loan continues until the end of the 60-month tenor.
The revised repayment schedule is communicated at sanction and remains available through customer servicing channels, allowing borrowers to plan future cash flows accordingly.
Why does the EMI increase after the moratorium?
The EMI increases after the moratorium because the principal balance remains untouched during the first 12 months and must be repaid within the remaining 48 months.
Understanding the step-up
- Year 1: Monthly payments consist only of interest.
- Year 2 onwards: Monthly payments include both principal and interest.
- Principal repayment is compressed into 48 months.
- This results in higher monthly instalments compared to the first-year outflow.
Worked example
Assume an eligible borrower receives an ECLGS facility of Rs. 15 lakh.
- Months 1–12: Only interest payments are made.
- Month 13 onwards: Principal repayment begins alongside interest.
- The repayment obligation increases because the full principal amount now has to be amortised over the remaining four years.
Borrowers should review their repayment schedule at sanction and prepare for the increase in monthly commitments from the second year onwards.
How can you make the most of the ECLGS moratorium year?
The moratorium year can help businesses strengthen operations before principal repayments begin.
Businesses that use the standstill period strategically are often better positioned to manage the higher EMI obligations that start from month 13.
Practical ways to use the moratorium effectively
- Deploy funds into revenue-generating business activities.
- Maintain adequate reserves for future EMI obligations.
- Monitor utilisation to avoid unnecessary interest costs.
- Make voluntary part-prepayments if surplus funds are available.
- Ensure monthly interest payments are made on time.
- Review repayment schedules periodically and plan cash flows accordingly.
Business scenario
A wholesale distributor in Coimbatore utilises Rs. 25 lakh under an ECLGS facility to expand inventory before the festive season. During the first year, the business pays only interest while using the additional inventory to increase sales. The improved cash flow helps build a reserve that supports repayment obligations once Dropline EMIs begin.
ECLGS moratorium vs regular loan moratorium: What is the difference?
An ECLGS moratorium differs significantly from a traditional full loan moratorium.
| ECLGS principal standstill | Regular full moratorium |
|---|---|
| Principal repayment paused | Principal and interest may both be paused |
| Interest payable monthly | Interest often accrues during the pause |
| Interest does not accumulate unpaid | Interest may be capitalised |
| Fixed 12-month structure | Duration varies by lender |
| Built into ECLGS 5.0 | Product-specific feature |
Key takeaway
The ECLGS structure keeps interest payments current throughout the standstill period. As a result, borrowers avoid the accumulation of unpaid interest that can occur under some full repayment moratorium arrangements.
What are the pros and cons of the ECLGS moratorium period?
The ECLGS moratorium period offers meaningful cash-flow support but requires disciplined repayment planning.
Advantages
- 12-month principal payment standstill.
- Lower first-year repayment burden.
- Improved liquidity for business operations.
- Interest remains serviced and does not accumulate unpaid.
- Voluntary part-prepayment permitted at zero charges.
- No separate application required.
Considerations
- Interest remains payable every month.
- EMI obligations increase from month 13.
- Missed interest payments can affect repayment history.
- The 12-month moratorium period is fixed.
- Businesses should prepare for the transition to full repayment.
Understanding both the benefits and repayment implications helps borrowers use the moratorium effectively while maintaining financial discipline.
How does the ECLGS moratorium fit into your borrowing strategy?
The ECLGS moratorium period provides eligible businesses with a structured 12-month principal standstill while maintaining regular interest servicing. This approach helps preserve cash flow during the initial phase of the loan while allowing businesses to deploy funds toward operations, inventory, expansion, or working capital requirements.
Borrowers should use the standstill year to strengthen cash flows, create repayment buffers, and prepare for the transition to Dropline EMIs from month 13 onwards. Businesses evaluating funding requirements beyond ECLGS can also explore business loans offered by Bajaj Finance.
Before borrowing, it is important to understand the applicable business loan interest rate and assess overall repayment affordability. Businesses can also estimate monthly repayments using the business loan EMI calculator to support informed financial planning.
