The Union Cabinet has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide essential liquidity support to MSMEs and airlines facing financial difficulties.
Pallavi Shrivastava 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 a 100% credit guarantee for MSMEs and a 90% guarantee for non-MSMEs and airlines.
As of early Tuesday, eligible borrowers will include MSMEs, non-MSMEs with existing working capital limits, and scheduled passenger airlines with standard accounts as of March 31, 2026.
Key details of the scheme:
- The total additional credit flow targeted is Rs.2,55,000 crore, which includes Rs.5,000 crore specifically for airlines.
- The scheme features a nil guarantee fee.
- Additional credit support for MSMEs is capped at 20% of peak working capital utilized during Q4 FY 26, up to Rs.100 crore.
- For airlines, the additional credit limit can reach up to Rs.1,500 crore under specific conditions.
- The loan tenure for MSMEs and non-MSMEs is set at 5 years with a 1-year moratorium; airlines will have a tenure of 7 years with a 2-year moratorium.
- The scheme applies to all loans sanctioned from the date of issue of guidelines by NCGTC up to March 31, 2027.
This initiative 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.”
