The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to support businesses facing short-term liquidity challenges arising from the ongoing West Asia crisis.
The scheme will provide credit guarantee coverage through National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs) for additional credit facilities extended to eligible borrowers.
Under the scheme, MSMEs will receive 100 per cent guarantee coverage, while non-MSMEs and the airline sector will receive 90 per cent guarantee coverage on the amount in default under the additional credit facility.
The scheme will cover MSMEs and non-MSMEs with existing working capital limits, as well as scheduled passenger airlines with outstanding credit facilities as of March 31, 2026, provided their loan accounts are classified as standard.
No guarantee fee will be charged under the scheme.
Eligible borrowers can avail additional credit of up to 20 per cent of the peak working capital utilised during the fourth quarter of FY26, capped at ₹100 crore. For airlines, additional support of up to 100 per cent of the eligible amount can be availed, subject to a cap of ₹1,500 crore per borrower and fulfilment of specified conditions.
The scheme targets a total additional credit flow of ₹2,55,000 crore, including ₹5,000 crore earmarked for the airline sector.
For MSMEs and non-MSMEs, the loan tenor will be five years from the date of first disbursement, including a one-year moratorium period. For the airline sector, the tenor will extend to seven years, including a moratorium of two years.
The guarantee cover period will remain co-terminus with the tenor of the loan.
The scheme will apply to all loans sanctioned from the date of issuance of guidelines by NCGTC until March 31, 2027.
According to the government, ECLGS 5.0 is aimed at helping businesses manage liquidity pressures linked to the West Asia conflict, while supporting continuity of operations, employment and supply chains.
The government stated that the scheme is expected to provide timely working capital support, particularly to MSMEs and airlines, helping businesses sustain operations, avoid job losses and maintain domestic production and ecosystem resilience.
