Centre Announces Credit Support Under ECLGS 5.0 to Support MSMEs, Airlines Amid West Asia Tensions

The Union Cabinet has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 with an additional credit flow target of ₹2.55 lakh crore. The scheme is for supporting businesses facing short-term liquidity pressure following disruptions linked to the West Asia conflict. 

Out of the total amount, ₹5,000 crore has been allocated for scheduled passenger airlines. The scheme will remain open for loans sanctioned until March 31, 2027. 

Guarantee Cover and Administration 

Under ECLGS 5.0, the government will provide a 100% credit guarantee cover for micro, small and medium enterprises (MSMEs). Non-MSME borrowers and airlines will receive a 90% guarantee cover on eligible loans. 

The guarantees will be extended through the National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions against defaults on additional loans issued under the scheme. 

The government said no guarantee fee will be charged from eligible borrowers availing benefits under the programme. 

Eligibility and Loan Limits 

The scheme will apply only to borrowers whose accounts were classified as standard as of March 31, 2026. Eligible MSME and non-MSME borrowers can avail additional credit of up to 20% of their peak working capital utilisation during the January-March quarter of FY26. 

The borrowing limit has been capped at ₹100 crore per unit. Scheduled passenger airlines can avail additional credit of up to 100% of their outstanding credit facilities, subject to a ceiling of ₹1,500 crore per borrower and prescribed conditions. 

Tenure and Sector Impact 

Loans sanctioned to MSMEs and other businesses will carry a 5-year tenure, including a 1-year moratorium on principal repayment. Airlines will receive a 7-year repayment period with a 2-year moratorium. 

The government said sectors such as textiles and glass manufacturing have been affected by supply disruptions linked to the conflict in West Asia. India, which is among the world’s largest crude oil importers, also faces pressure from rising energy costs and inflation risks. 

ECLGS was first introduced in May 2020 during the Covid-19 pandemic to provide emergency credit support to businesses. 

Read More: Subhadra Scheme: Odisha Govt Disburses ₹61 Crore to 79,000+ Women After Fixing Verification Issues! 

Conclusion  

ECLGS 5.0 extends additional credit support to MSMEs, non-MSMEs and airlines amid disruptions linked to the West Asia conflict. The guarantees will be routed through NCGTC. 

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