Cabinet Approves Emergency Credit Line Guarantee Scheme 5.0 To Support MSMEs, Airlines Amid West Asia Crisis: Here’s All You Need to Know

ECLGS 5.0: The Union Cabinet chaired by Prime Minister Narendra Modi has given its approval to the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide targeted credit support to address the liquidity stress being faced by the businesses due to global volatility and ongoing conflict in West Asia.

It provides 100% credit guarantee cover to the MSMEs and 90% cover to non-MSMEs and the airline sector through the National Credit Guarantee Trustee Company Limited (NCGTC), which passes on the benefit to the borrower through its member lending institution(s). The guarantee would cover the amount in default on other credit facilities extended to the borrower.

Who is eligible for the ECLGS 5.0? 

MSMEs, non-MSMEs and airlines. The working capital limits should be effective as of March 31, 2026, and the accounts of the eligible borrowers should be classified as standard.

What form of credit support will be provided under ECLGS 5.0?

Under ECLGS 5.0, lending institutions will be provided a 100% credit guarantee cover by the National Credit Guarantee Trustee Company Limited (NCGTC) for MSMEs and 90% for non-MSMEs and airlines. The additional credit support is subject to limits and conditions and is capped at 20 per cent of peak working capital for MSMEs and non-MSMEs and up to 100 per cent for airlines.

What can companies borrow under ECLGS 5.0?

Depending on their eligibility and requirements, MSMEs and non-MSMEs can obtain additional credit up to ₹100 crore, and airlines can get up to Rs 1,500 crore per borrower.

What is the term of the loan in ECLGS 5.0?

The tenure of the loan is five years with a moratorium of one year for MSME and non-MSME. They have 7 years of tenure with a 2-year moratorium on the airline. The loan tenure will match the warranty period.

When will the ECLGS 5.0 be rolled out?

Loans under the scheme shall be available from the date of notification until 31st March 2027 and shall provide medium-term liquidity support to the businesses in the future.

The Significance of ECLGS 5.0

ECLGS 5.0 aims at keeping the cash flowing, protecting jobs and sustaining supply chains. The scheme will introduce stability to industries affected by the ongoing global turmoil. The scheme is expected to enhance access to liquidity and strengthen the economy, particularly for MSMEs and the aviation industry.

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