THEBUSINESSBYTES
BUREAU
NEW
DELHI, MAY 5, 2026
In a decisive move to
shield Indian businesses from the ripple effects of the ongoing West Asia
crisis, the Union Cabinet chaired by Prime Minister Narendra Modi has approved
the rollout of the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, aimed at
infusing fresh liquidity and sustaining economic momentum.
The revamped scheme
seeks to facilitate an additional credit flow of ₹2.55 lakh crore, including a dedicated ₹5,000 crore window for the airline
sector. It will provide sovereign-backed credit guarantee coverage through the
National Credit Guarantee Trustee Company Limited to Member Lending
Institutions, enabling them to extend crucial financial
support to eligible borrowers facing short-term liquidity pressures.
Under ECLGS 5.0,
Micro, Small and Medium Enterprises (MSMEs) will receive 100 percent guarantee
coverage on incremental loans, while non-MSMEs and airlines will be covered up
to 90 percent, significantly reducing lender risk and encouraging credit
expansion. Notably, the scheme eliminates guarantee fees, making borrowing more
attractive for stressed sectors.
Eligible borrowers
include MSMEs and non-MSMEs with existing working capital limits, along with
scheduled passenger airlines that had standard loan accounts as of March 31,
2026. Businesses can avail additional credit of up to 20 percent of their peak
working capital utilisation during the fourth quarter of FY26, capped at ₹100 crore. For airlines, the support
extends up to 100 percent of their credit exposure, subject to a ceiling of
₹1,500 crore per borrower and specific conditions.
The loan tenure for
MSMEs and non-MSMEs is fixed at five years, including a one-year moratorium,
while airlines will benefit from a longer repayment window of seven years with
a two-year moratorium. The guarantee cover will remain valid for the entire
loan duration, ensuring comprehensive risk mitigation for lenders.
The scheme will be operational for loans sanctioned from the date of issuance of guidelines by NCGTC until March 31, 2027.
ECLGS 5.0 is expected to play a pivotal role in helping businesses navigate supply chain disruptions and financial uncertainties triggered by geopolitical tensions. By ensuring timely access to working capital, the initiative aims to protect employment, maintain industrial output, and reinforce the resilience of India’s economic ecosystem.
