The Government has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to support eligible borrowers affected by liquidity pressures linked to the West Asia situation.
Under the scheme, National Credit Guarantee Trustee Company Limited (NCGTC) will provide guarantee coverage to Member Lending Institutions (MLIs) for additional credit facilities extended to eligible MSMEs, non-MSMEs, and scheduled passenger airlines.
The scheme provides 100% guarantee coverage for MSMEs and 90% coverage for non-MSMEs and the airline sector for the amount in default under the additional credit facility.
Eligible borrowers include MSMEs and non-MSMEs with existing working capital limits and scheduled passenger airlines having outstanding credit facilities as of March 31, 2026, provided their loan accounts are classified as standard.
The government stated that the scheme targets a total additional credit flow of Rs.2,55,000 crore, including Rs.5,000 crore allocated for airlines.
Key features of the scheme include:
- No guarantee fee for borrowers
- Additional credit support of up to 20% of peak working capital utilised during Q4 FY 26, capped at Rs.100 crore
- For airlines, additional credit support of up to 100%, capped at Rs.1,500 crore per borrower, subject to specified conditions
The loan tenor for MSMEs and non-MSMEs, excluding airlines, will be five years from the date of first disbursement, including a moratorium period of one year.
For the airline sector, the tenor will extend to seven years from the date of first disbursement, including a moratorium of two years.
The tenure of the guarantee cover will remain co-terminus with the tenor of the loan.
According to the government, the scheme will apply to all loans sanctioned from the date of issuance of the guidelines by NCGTC up to March 31, 2027.
The government stated that the scheme is intended to support businesses facing operational challenges arising from the West Asia conflict. It is also expected to help businesses maintain operations, protect employment, and sustain supply chains through access to additional working capital support from banks and financial institutions.