Cabinet Approves Emergency Credit Line Guarantee Scheme 5.0 | All You Need To Know

The Union Cabinet has cleared Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, aimed at easing cash pressure on businesses facing disruptions linked to the West Asia crisis. The proposal targets additional credit flow of Rs.2,55,000 crore, including Rs.5,000 crore earmarked for airlines. National Credit Guarantee Trustee Company Limited will offer credit guarantee coverage to Member Lending Institutions.

Under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 credit guarantee coverage framework, the plan is expected to protect jobs, stabilise operations, and keep supply chains active across sectors. The design focuses on short-term liquidity needs, so firms can maintain production and services. Authorities expect this support to help businesses avoid distress closures during the current uncertainty.

Emergency Credit Line Guarantee Scheme 5.0 credit guarantee coverage for MSMEs and airline sector

The Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 credit guarantee coverage offers different protection levels. MSMEs receive 100% guarantee on the additional sanctioned amount. Non-MSMEs and the airline sector receive 90% guarantee cover. The guarantee applies to amounts in default under the additional facility, extended by Member Lending Institutions to eligible borrowers.

Eligibility under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 credit guarantee coverage includes MSMEs, non-MSMEs, and scheduled passenger airlines. Borrowers must have existing working capital or outstanding credit facilities that are standard as on 31 March 2026. Only accounts classified as standard are permitted to access the extended support window.

Emergency Credit Line Guarantee Scheme 5.0 credit guarantee coverage loan quantum and terms

Under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 credit guarantee coverage, additional funding for MSMEs and non-MSMEs can reach 20% of peak working capital used during the fourth quarter of FY 26, limited to Rs.100 crore. For airlines, the additional facility can equal 100% of outstanding, capped at Rs.1,500 crore per borrower, subject to specific conditions.

The Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 credit guarantee coverage specifies different loan tenors. For MSMEs and non-MSMEs, except airlines, the repayment period is five years, including a one-year moratorium. Airlines receive a seven-year tenor, with a two-year moratorium. The guarantee cover period always ends with the loan tenor. No guarantee fee is charged.

The operational period of the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 credit guarantee coverage runs from the date National Credit Guarantee Trustee Company Limited issues guidelines, until 31 March 2027. All loans sanctioned during this window can qualify. Member Lending Institutions such as banks and financial institutions will extend the additional credit backed by this sovereign guarantee structure.

By backing incremental working capital through the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 credit guarantee coverage, the government intends to support MSMEs, larger businesses, and the airline sector during the West Asia crisis. The design focuses on timely liquidity so enterprises can stay operational, retain employees, and keep domestic production and logistics networks functioning without major disruption.