Cabinet approves Emergency Credit Line Guarantee Scheme 5.0

**Executive Summary** The Union Cabinet has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide credit guarantee coverage for additional credit support to businesses impacted by the West Asia crisis. Targeting a total credit flow of Rs. 2,55,000 crore, the scheme aims to address short-term liquidity mismatches for MSMEs, non-MSMEs, and the airline sector. The scheme applies to loans sanctioned from the issuance of guidelines through March 31, 2027. **Key Points / Main Content** **Eligibility and Coverage** * **Eligible Borrowers:** MSMEs, non-MSMEs, and scheduled passenger airlines with standard accounts and existing working capital limits as of March 31, 2026. * **Guarantee Coverage:** 100% coverage for MSMEs and 90% for non-MSMEs and the airline sector. * **Guarantee Fee:** No fee is charged for the guarantee. **Quantum of Support** * **General Borrowers:** Additional credit up to 20% of peak working capital utilized during Q4 FY 26, with a cap of Rs. 100 crore. * **Airlines:** Additional credit up to 100%, capped at Rs. 1,500 crore per borrower, subject to specific conditions. **Loan Tenor and Moratorium** * **MSMEs/Non-MSMEs:** A 5-year tenor from the first disbursement date, including a 1-year moratorium. * **Airline Sector:** A 7-year tenor from the first disbursement date, including a 2-year moratorium. * **Guarantee Tenure:** The guarantee cover is co-terminus with the tenor of the loan. **Scheme Objectives** * **Operational Continuity:** Enables businesses to maintain operations, protect jobs, and sustain supply chains during regional conflicts. * **Economic Resilience:** Aims to ensure uninterrupted domestic production and maintain the overall resilience of the business ecosystem. **Impact Analysis** **MSMEs and Non-MSME Businesses** **Impact** These entities receive critical liquidity to tide over challenges from the West Asia conflict, helping them sustain operations and prevent job losses. **Action Required** Eligible borrowers must ensure their accounts are classified as standard as of March 31, 2026, and apply for additional credit within the sanctioned period ending March 31, 2027. **Scheduled Passenger Airlines** **Impact** Airlines gain access to substantial credit support (up to Rs. 1,500 crore) with extended repayment terms (7 years) to manage liquidity mismatches. **Action Required** Airlines must satisfy specific conditions and ensure their credit facilities are standard as of March 31, 2026, to qualify for the 90% guarantee coverage. **Member Lending Institutions (MLIs)** **Impact** Banks and financial institutions are protected by credit guarantees from the National Credit Guarantee Trustee Company Limited (NCGTC) against defaults on additional credit facilities. **Action Required** MLIs must extend additional credit support to eligible borrowers and ensure all such loans are sanctioned before the March 31, 2027 deadline. **National Credit Guarantee Trustee Company Limited (NCGTC)** **Impact** Responsible for providing the credit guarantee coverage to MLIs for the amount in default. **Action Required** NCGTC must issue the specific guidelines to initiate the scheme and manage the guarantee coverage for sanctioned loans.

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