The emergency credit line guarantee scheme (ECLGS), which was a major driver of loan demand in the first phase of the pandemic, is seeing a tapering off in utilisation. As of July 2, an amount of Rs 2.7 lakh crore has been sanctioned under the scheme. Of this, Rs 2.1 lakh crore has been disbursed.The ECLGS aimed to provide collateral-free and government-guaranteed loans to mitigate the economic distress faced by micro, small and medium enterprises (MSMEs) and other entities due to the Covid-induced lockdowns. The government has extended the scope of the ECLGS from time to time through the introduction of ECLGS 2.0, 3.0 and 4.0, and it is valid till September 30, 2021.In the latest iteration of the scheme ECLGS 4.0, the overall government guarantee was increased from loans totalling Rs 3 lakh crore earlier to Rs 4.5 lakh crore. In a reply to a Parliament query on Tuesday, the government said that, as of July 2, guarantees have been issued for loans granted to around 1.1 crore MSMEs. According to bankers, borrowers eligible and in need of additional funds have already availed of the loans in the first two rounds. Borrowers do not want to be under a watchlist for stressed loans.“We have seen the number of applicants dropping with every new version of the scheme,” said a banker. With only two months more for the scheme, banks do not expect a big jump in demand for government-guaranteed loans. Some feel that there could be fresh borrowing if there is a spike in demand before the festival season.