Emergency credit line guarantee scheme

Emergency credit line guarantee scheme

“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,” said Pallavi Shrivastava, highlighting the urgency of the situation.

The Union Cabinet recently approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, designed to provide liquidity support to micro, small, and medium enterprises (MSMEs) and airlines amid the ongoing global economic uncertainties.

This initiative aims to offer a 100% credit guarantee for MSMEs and 90% for non-MSMEs and airlines, ensuring that eligible businesses can access necessary funding without the burden of a guarantee fee.

Eligible borrowers include:

• MSMEs with existing working capital limits
• Non-MSMEs with established working capital limits
• Scheduled passenger airlines maintaining standard accounts as of March 31, 2026

The scheme targets an additional credit flow of Rs.2,55,000 crore, which includes Rs.5,000 crore specifically allocated for airlines. This significant amount is expected to help businesses maintain operations and protect jobs during this challenging period.

The additional credit support is capped at:

20% of peak working capital utilized during Q4 FY 26 for MSMEs, up to Rs.100 crore and Up to Rs.1,500 crore for airlines, subject to specific conditions.

The loan tenure for MSMEs and non-MSMEs is set at five years with a one-year moratorium, while airlines will have a seven-year tenure with a two-year moratorium.

This scheme is particularly timely as it addresses liquidity challenges stemming from the ongoing West Asia crisis, which has impacted many sectors.

Pallavi Shrivastava emphasized that “what really matters in such moments is timely access to working capital,” noting that the guarantee structure helps unlock funds by instilling confidence in lenders.

The Emergency Credit Line Guarantee Scheme is applicable to all loans sanctioned from the date of issue of guidelines by the National Credit Guarantee Trustee Company Limited (NCGTC) until March 31, 2027.