NewsIndia

The Union Cabinet approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide liquidity support to MSMEs and airlines amid global economic uncertainty.

Pallavi Shrivastava, a key participant, stated, “ECLGS 5.0 comes at a time when many MSMEs are dealing with tighter cash flow cycles and increasing uncertainty in their day-to-day operations.” The scheme aims to offer crucial credit guarantees for businesses facing financial strain.

The ECLGS provides a 100% credit guarantee for MSMEs and a 90% guarantee for non-MSMEs and airlines. Eligible borrowers include MSMEs, non-MSMEs with existing working capital limits, and scheduled passenger airlines with standard accounts as of March 31, 2026.

Key facts:

• The scheme targets an additional credit flow of Rs.2,55,000 crore, including Rs.5,000 crore specifically for airlines.
• The guarantee fee for the scheme is nil.
• Credit support is capped at 20% of peak working capital utilized during Q4 FY 26 for MSMEs, up to Rs.100 crore.
• For airlines, the additional credit limit is up to Rs.1,500 crore under specific conditions.
• The loan tenure is five years for MSMEs and non-MSMEs with a one-year moratorium; it is seven years for airlines with a two-year moratorium.

The scheme aims to help businesses maintain operations, protect jobs, and sustain supply chains amid the ongoing West Asia crisis. Shrivastava added, “What really matters in such moments is timely access to working capital and the 100% guarantee structure helps unlock that by giving lenders the confidence to move faster.”

The ECLGS is applicable to all loans sanctioned from the date of issue of guidelines by the National Credit Guarantee Trustee Company Limited up to March 31, 2027. It is designed to tackle liquidity challenges arising from the ongoing West Asia conflict.