Cabinet Approves Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to Support Businesses Amid West Asia Crisis

NEW DELHI The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has officially approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. The scheme is designed to provide critical credit guarantee coverage to Member Lending Institutions (MLIs) through the National Credit Guarantee Trustee Company Limited (NCGTC). This initiative aims to help eligible business borrowers secure additional credit support and resolve short-term liquidity mismatches resulting from the ongoing situation in West Asia.
The scheme targets a total additional credit flow of Rs. 2,55,000 crore, which includes a dedicated allocation of Rs. 5,000 crore specifically for the airline sector.
Key Features of ECLGS 5.0
Eligible Borrowers: MSMEs, non-MSMEs with existing working capital limits, and scheduled passenger airlines with outstanding credit facilities as of March 31, 2026, provided their accounts are classified as standard.
Guarantee Coverage: Offers 100% guarantee coverage for MSMEs and 90% for non-MSMEs and the airline sector.
Guarantee Fee: Nil.
Quantum of Support: * MSMEs & Non-MSMEs: Additional credit up to 20% of peak working capital utilized during Q4 FY 26, capped at Rs. 100 crore.
Airlines: Additional credit up to 100%, capped at Rs. 1,500 crore per borrower, subject to specific conditions.
Loan Tenor & Moratorium:
MSMEs / Non-MSMEs (excluding Airlines): 5 years from the date of first disbursement, including a 1-year moratorium.
Airline Sector: 7 years from the date of first disbursement, including a 2-year moratorium.
Guarantee Cover Duration: Co-terminus with the tenor of the loan.
Scheme Validity: Applicable to all loans sanctioned from the date NCGTC issues the guidelines up to March 31, 2027.
Anticipated Impact
ECLGS 5.0 is a major intervention to help businesses navigate the operational challenges stemming from the West Asia conflict. By delivering timely liquidity, the scheme expects to achieve the following outcomes:
Sustain Operations & Jobs: Helps businesses maintain daily operations, protect employment, and prevent job losses.
Protect Supply Chains: Ensures the resilience of domestic supply chains and prevents disruption.
Support Core Sectors: Ensures that the additional working capital needs of MSMEs and the airline industry are met efficiently by banks and financial institutions.
Promote Production: Encourages uninterrupted domestic production to maintain overall economic stability.