Source: Press Information Bureau (PIB) Delhi, Union Cabinet Date of Release: 05 MAY 2026, 6:48 PM Release ID: 2258114
The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has officially approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. This initiative is designed to provide immediate credit support to businesses facing financial strain due to the ongoing geopolitical situation in West Asia.
Objective and Target
The primary goal of ECLGS 5.0 is to offer credit guarantee coverage to Member Lending Institutions (MLIs) through the National Credit Guarantee Trustee Company Limited (NCGTC).
- Total Target: The scheme aims to facilitate an additional credit flow of Rs. 2,55,000 crore.
- Aviation Specifics: Out of the total target, Rs. 5,000 crore is specifically earmarked for the airline sector.
Salient Features of ECLGS 5.0
The scheme includes several key provisions to ensure timely liquidity for various business sectors:
- Eligible Borrowers:
- MSMEs and non-MSMEs with existing working capital limits as of March 31, 2026.
- Scheduled passenger airlines with outstanding credit facilities as of March 31, 2026.
- All accounts must be classified as “standard” to be eligible.
- Guarantee Coverage:
- 100% coverage for MSMEs.
- 90% coverage for non-MSMEs and the airline sector.
- Cost to Borrowers: There is nil guarantee fee associated with this scheme.
- Duration: The scheme applies to all loans sanctioned from the date the NCGTC issues guidelines until March 31, 2027.
Quantum of Support
The amount of additional credit support is capped based on the type of borrower:
- MSMEs and Non-MSMEs: Additional credit up to 20% of peak working capital utilized during Q4 FY 26, with a maximum cap of Rs. 100 crore.
- Airlines: Additional credit up to 100%, capped at Rs. 1,500 crore per borrower (subject to specific conditions).
Loan Tenor and Moratorium
The repayment structures vary depending on the sector:
- For MSMEs and Non-MSMEs: The loan tenor is 5 years from the date of the first disbursement, which includes a 1-year moratorium.
- For the Airline Sector: The loan tenor is 7 years from the date of the first disbursement, which includes a 2-year moratorium.
- Guarantee Cover: The period of the guarantee cover is co-terminus with the tenor of the loan.
Anticipated Impact on the Economy
The implementation of ECLGS 5.0 is expected to have several positive effects on the Indian business ecosystem:
- Crisis Management: It enables businesses to navigate the challenges arising from the West Asia conflict.
- Operational Stability: It helps businesses maintain operations and sustain vital supply chains.
- Job Protection: By providing timely liquidity, the scheme aims to prevent job losses across various sectors.
- Resilience: It promotes uninterrupted domestic production and strengthens the overall resilience of the economic ecosystem.