ECLGS loan repayment follows a 60-month structure with a 12-month principal standstill and repayment through Dropline EMIs over the remaining 48 months. You can part-pay or foreclose the loan at any time without paying any prepayment or foreclosure charges.
In summary
- ECLGS loans have a total tenor of 60 months, including a 12-month interest-only period followed by 48 months of principal and interest repayment through Dropline EMIs.
- During the first year, borrowers pay only interest on the utilised loan amount, helping preserve working capital and manage cash flows.
- Principal repayment begins from the 13th month and continues through structured monthly instalments until maturity.
- The scheme allows part-payment and foreclosure at any stage without charges, penalties or lock-in requirements.
- Repayments are collected through the same bank account and NACH mandate linked to the borrower's existing loan relationship.
- Businesses looking to estimate future instalments can use a business loan emi calculator to understand repayment obligations before taking the loan.
- This page explains how ECLGS repayments work, how EMIs are calculated, repayment methods, prepayment options and foreclosure procedures.
How does ECLGS loan repayment work?
ECLGS loan repayment is designed to reduce repayment pressure during the initial phase of the loan while allowing businesses enough time to stabilise their cash flows. The repayment structure is divided into two stages across the overall 60-month tenure.
During the first 12 months, borrowers are required to pay only the applicable interest on the outstanding amount. No principal repayment is required during this period. This principal standstill helps businesses utilise funds for operational requirements without immediately taking on full EMI obligations.
From the 13th month onwards, the loan automatically converts into a Dropline EMI structure. Monthly instalments then include both principal and interest and continue for the remaining 48 months until the loan is fully repaid.
The entire repayment process is linked to the same repayment account and NACH mandate already registered for the borrower's existing loan. No separate repayment setup is required. Borrowers can also choose to part-pay or foreclose the loan at any point during the tenor without incurring any additional charges.
Why does the ECLGS loan begin with a 12-month interest-only period?
One of the most distinctive features of an ECLGS loan is the 12-month principal standstill period at the beginning of the loan tenure.
During this period:
- Only interest payments are required each month.
- Principal repayment remains suspended.
- Businesses retain access to the full loan amount.
- Monthly repayment obligations remain significantly lower than a standard EMI structure.
- Cash flows can be directed towards inventory, salaries, vendor payments and other working capital requirements.
For example, if a borrower avails an ECLGS loan of ₹10 lakh, the first 12 months involve servicing only the applicable interest on the utilised amount. Since no principal is repaid during this period, businesses can use the funds more effectively during the critical recovery or growth phase.
At the end of month 12, the transition into EMI repayment happens automatically. Borrowers do not need to submit any additional request or documentation.
What are the repayment terms of an ECLGS loan?
ECLGS loans follow a standardised repayment structure prescribed under the scheme guidelines.
| Particulars | Details |
|---|---|
| Interest rate | 7.50% to 13.00% per annum |
| Maximum interest cap | 13.00% per annum |
| Total tenor | 60 months |
| Principal standstill period | 12 months |
| EMI repayment period | 48 months |
| Repayment structure | Dropline EMI |
| Prepayment charges | Nil |
| Foreclosure charges | Nil |
During the first year, borrowers pay only the applicable interest on the utilised amount. Principal repayment starts from the 13th month and continues through Dropline EMIs over the remaining 48 months. The structure is designed to provide immediate liquidity support while ensuring gradual repayment over the balance tenure.
How are ECLGS EMIs calculated after the first year?
After the completion of the principal standstill period, the loan enters the repayment phase and converts into a Dropline EMI facility.
Under this structure, every monthly instalment consists of two components:
- Principal repayment
- Interest repayment
As each EMI is paid, the outstanding principal reduces. Since interest is calculated on the outstanding utilised amount, future interest costs also decline progressively.
The "Dropline" concept means that the available loan limit gradually reduces according to a predefined repayment schedule. The facility is structured to reach zero at the end of the 60-month tenure.
Example
Assume a borrower avails an ECLGS loan of ₹20 lakh at an interest rate of 10.00% per annum.
- Months 1–12: Only interest payments are made.
- Months 13–60: Principal and interest are repaid through EMIs over 48 months.
- The outstanding balance reduces every month as principal is repaid.
- The available limit also reduces in line with the Dropline schedule.
The exact EMI amount depends on the sanctioned loan amount, applicable interest rate and outstanding balance. Borrowers can use a business loan emi calculator to estimate future repayments and plan their cash flows accordingly.
How are ECLGS EMIs collected from borrowers?
ECLGS loan collections operate through the same repayment infrastructure already linked to the borrower's existing loan account.
The process is straightforward:
- The repayment-linked bank account registered for the existing loan continues for the ECLGS loan.
- The existing NACH mandate is generally reused.
- Monthly instalments are automatically debited on the scheduled due date.
- Borrowers do not need to register a separate repayment account.
- A fresh NACH mandate is required only if the existing mandate is inactive or unavailable.
Because repayments are automated, borrowers should ensure that sufficient funds are available in the linked bank account before the due date.
Loan statements showing every debit and repayment transaction can be downloaded free of cost from the customer portal or mobile app.
How can you make a part-payment on your ECLGS loan?
ECLGS loans allow borrowers to reduce their outstanding balance through part-payments at any stage of the loan tenure. Since the scheme prohibits part-payment charges, every rupee paid towards principal directly reduces future interest costs.
Step 1: Access your loan account
Log in to the customer portal or mobile application using your registered mobile number and OTP credentials.
Step 2: Select the ECLGS loan account
Navigate to the loans section and choose the ECLGS loan account number (LAN) from your active loan relationships.
Step 3: Review your outstanding balance
Before proceeding, check the current outstanding principal and repayment details displayed in the account summary.
Step 4: Choose the part-payment option
Select the prepayment or part-payment facility available within the loan account section.
Step 5: Enter the amount you wish to pay
Specify the amount you want to contribute towards reducing the principal balance.
Step 6: Complete the payment
Make the payment using the available digital modes such as net banking, UPI or other approved payment methods.
Step 7: Verify the updated loan balance
Once the transaction is successful, download the revised statement to view the updated outstanding amount and available limit.
Benefits of part-payment
- Reduces outstanding principal immediately.
- Lowers future interest costs.
- Can be done during both repayment phases.
- Carries zero charges.
- Helps reduce the effective cost of borrowing.
For borrowers looking to lower their overall business loan interest rate burden, periodic part-payments can result in meaningful savings over the loan tenure.
How can you foreclose an ECLGS loan before the 60-month tenor ends?
Borrowers who no longer require the facility can choose to foreclose the loan completely before the scheduled maturity date. ECLGS permits foreclosure without any charges or penalties.
Step 1: Check the foreclosure amount
Request a foreclosure statement through the customer portal, mobile app, customer care or branch. This statement reflects the exact amount payable, including outstanding principal and accrued interest up to the closure date.
Step 2: Review the closure figure
Verify the amount carefully because interest continues to accrue until the actual payment date.
Step 3: Initiate the foreclosure request
Submit a foreclosure request through the available servicing channels.
Step 4: Make the final payment
Pay the full outstanding amount using approved payment methods.
Step 5: Wait for closure confirmation
After successful payment and verification, the loan account is marked as closed in the system.
Step 6: Download closure documents
Access and download the No Objection Certificate (NOC), closure letter and updated account statement through the customer portal.
Benefits of foreclosure
- No foreclosure charges.
- No prepayment penalty.
- No lock-in period.
- Immediate stoppage of future interest.
- Clean closure of the loan account.
Borrowers can foreclose even during the first 12-month interest-only period if they no longer require the facility.
What repayment charges apply to an ECLGS loan?
ECLGS loans follow a government-mandated zero-fee structure for repayment-related activities.
| Charge Type | Applicable |
|---|---|
| Part-payment charges | Nil |
| Foreclosure charges | Nil |
| Bounce charges | Nil |
| Penal interest | Nil |
| Annual maintenance charges | Nil |
| Flexi facility charges | Nil |
| Statement download charges | Nil |
| Certificate download charges | Nil |
| Stamp duty | Applicable as per state laws |
Apart from stamp duty payable at the time of loan agreement execution, borrowers do not incur any repayment-related charges during the life of the loan.
What happens if you miss an ECLGS loan payment?
Although ECLGS loans do not levy bounce charges or penal interest, missed repayments can still have significant consequences.
When an EMI remains unpaid:
- The delay is reported to credit bureaus.
- Your repayment history is affected.
- Days Past Due (DPD) records begin accumulating.
- Future access to loans and credit facilities may become more difficult.
- Prolonged defaults can result in Non-Performing Asset (NPA) classification.
- Recovery proceedings may be initiated if the account remains overdue for an extended period.
For example, repayment delays crossing 30 days, 60 days and 90 days are reflected in the borrower's credit history and can impact future loan eligibility across lenders. If repayment difficulties are anticipated, it is advisable to contact the lender before the due date rather than waiting for the account to become overdue.
What are the advantages and considerations of the ECLGS repayment structure?
The repayment framework combines liquidity support, repayment flexibility and cost savings for borrowers.
Advantages
- 12-month principal standstill reduces first-year repayment burden.
- Interest-only payments support cash-flow management.
- No part-payment charges.
- No foreclosure charges.
- No lock-in period.
- Existing repayment setup continues without changes.
- Interest is charged only on utilised funds.
- Borrowers can reduce interest costs through voluntary prepayments.
Considerations
- EMI obligations increase from month 13 when principal repayment begins.
- The available limit gradually declines under the Dropline structure.
- Repayment discipline remains important despite the absence of penalties.
- Missed EMIs can still affect credit scores and borrowing eligibility.
Businesses that prepare for the month-13 transition and maintain repayment discipline can maximise the benefits of the scheme.
Conclusion
The ECLGS repayment structure is designed to balance immediate liquidity support with long-term repayment affordability. Borrowers benefit from a 12-month interest-only period, followed by structured repayment through Dropline EMIs over the remaining 48 months.
The absence of prepayment charges, foreclosure penalties, bounce charges and penal interest gives businesses greater flexibility in managing their debt obligations. Whether you choose to continue repayments as scheduled, make periodic part-payments or close the loan early, the scheme allows you to do so without additional costs.
Before borrowing, it is helpful to compare available business loans, understand the applicable business loan interest rate and estimate future repayments using a business loan EMI calculator so that repayment obligations align with your business cash flows.
