To ensure businesses are not starved of working capital needed due to the adverse impact of the West Asia conflict, the Cabinet on Tuesday approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to support additional credit flow of Rs 2.55 lakh crore, including Rs 5,000 crore for airlines.
The total budget outlay for the scheme is pegged at Rs 18,100 crore. Under ECLGS 5.0, MSMEs will receive 100% guarantee coverage, while non-MSMEs and airlines will receive up to 90% guarantee coverage. The guarantee fee has been waived, and borrowers will benefit from a moratorium on principal repayment, easing immediate financial pressure.
Eligible borrowers include MSMEs, non-MSMEs, and scheduled passenger airlines with existing working capital limits and standard loan accounts as of March 31, 2026. Businesses can access additional credit of up to 20% of their peak working capital utilisation during the fourth quarter of FY26, capped at Rs 100 crore. For airlines, support extends up to 100% of peak credit, with a cap of Rs 1,500 crore per borrower.
The scheme will provide credit guarantee coverage through the National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs), enabling them to extend additional loans to eligible borrowers facing liquidity stress due to external shocks.
The tenor of loans for MSMEs and non-MSMEs is set at five years, including a one-year moratorium on principal repayment. Airlines will benefit from a longer tenure of seven years, including a two-year moratorium. The guarantee cover will remain co-terminus with the loan duration, and the scheme will remain open for loans sanctioned until March 31, 2027.
The government said the scheme is designed to help businesses navigate short-term liquidity mismatches, maintain operations, and safeguard jobs amid global uncertainty. It is also expected to support supply chain continuity and domestic production.
Originally launched in May 2020 during the COVID-19 pandemic, the ECLGS has so far supported over 11 million MSMEs, with guarantees worth Rs 3.7 lakh crore extended.