Emergency Credit Line Guarantee Scheme (ECLGS) 5.0

The Union Cabinet has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. The scheme aims to provide credit guarantee coverage of 100% for MSMEs and 90% for non-MSMEs as well as the airline sector. This coverage is provided to Member Lending Institutions (MLIs) by the National Credit Guarantee Trustee Company Limited (NCGTC) for the amount in default under the additional credit facility extended to eligible borrowers.

The primary objective is to help businesses tide over any short-term liquidity mismatches in view of the West Asia Crisis. The scheme targets a total additional credit flow of Rs. 2,55,000 crore (including Rs. 5,000 crore for airlines).

Salient Features of the Scheme

• Eligible Borrowers: MSMEs and non-MSMEs with existing working capital limits, and scheduled passenger airlines having outstanding credit facilities as of March 31, 2026, provided their accounts are standard.
• Guarantee Coverage: 100% for MSMEs and 90% for non-MSMEs as well as the airline sector.
• Guarantee Fee: Nil.
• Quantum of Support: Additional credit up to 20% of peak working capital utilised during Q4 FY 26 (capped at Rs. 100 crore). For airlines, it is up to 100% (capped at Rs. 1,500 crore per borrower, subject to satisfying certain specific conditions).

Tenor of Loan

• For MSMEs / Non-MSMEs (except Airline sector): 5 years from the date of first disbursement, including a moratorium of 1 year.
• For Airline sector: 7 years from the date of first disbursement, including a moratorium of 2 years.

Additional Details

• Tenure of Guarantee Cover: The maximum period of guarantee cover shall be co-terminus with the tenor of the loan.
• Duration of the Scheme: The scheme would be applicable to all loans sanctioned during the period from the date of issue of these guidelines by NCGTC up to March 31, 2027.

Impact & Benefits

The scheme aims to enable businesses to tide over the challenges arising from the West Asia conflict. Additionally, this is expected to help businesses maintain their operations, protect jobs, and sustain supply chains.

The proposed credit guarantee scheme is a major step to help businesses, particularly MSMEs and the airline sector, ensure their additional working capital needs are catered to by Banks & FIs. By providing timely liquidity, the scheme will sustain businesses, prevent job losses, promote uninterrupted domestic production, and maintain the resilience of the ecosystem.