The Union Cabinet led by Prime Minister Narendra Modi has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to strengthen credit support for businesses affected by the ongoing West Asia crisis. The scheme aims to facilitate a total credit flow of ₹2.55 lakh crore, including ₹5,000 crore earmarked for the airline sector.
ECLGS 5.0 is designed to help businesses facing liquidity stress due to disruptions in trade, supply chains, and rising fuel costs caused by global geopolitical tensions. Under the scheme, the government will provide credit guarantee coverage through the National Credit Guarantee Trustee Company Limited (NCGTC), enabling banks and financial institutions to extend additional loans with reduced risk.
The scheme offers 100% guarantee coverage for MSMEs and 90% coverage for non-MSMEs and airlines. Eligible borrowers can avail additional credit up to 20% of their peak working capital used during the last quarter of FY26, subject to specified limits. Airlines can receive support up to ₹1,500 crore under special conditions.
Importantly, the scheme carries no guarantee fee, reducing the financial burden on borrowers. MSMEs and non-MSMEs will receive loans with a five-year tenure including a one-year moratorium, while airlines will get a seven-year tenure with a two-year moratorium. The scheme will remain operational until March 31, 2027.
ECLGS 5.0 is expected to provide crucial financial stability to businesses, support employment, and strengthen economic resilience during global uncertainties.
