**Executive Summary**
The Union Cabinet has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide credit guarantee coverage to Member Lending Institutions (MLIs) for supporting businesses affected by the West Asia crisis. The scheme targets an additional credit flow of Rs. 2,55,000 crore, including a dedicated Rs. 5,000 crore for the airline sector. Eligible loans must be sanctioned by March 31, 2027, to address short-term liquidity mismatches and protect domestic production and employment.
**Key Points / Main Content**
**Scheme Parameters and Coverage**
* **Guarantee Coverage:** Offers 100% guarantee coverage for MSMEs and 90% for non-MSMEs and the airline sector.
* **Guarantee Fee:** No fee is charged for the guarantee coverage.
* **Target Credit Flow:** Aims for a total additional credit flow of Rs. 2,55,000 crore.
* **Validity:** The scheme applies to all loans sanctioned from the date of guideline issuance until March 31, 2027.
**Eligibility Requirements**
* **Borrower Criteria:** Open to MSMEs, non-MSMEs, and scheduled passenger airlines with existing working capital limits or outstanding credit facilities as of March 31, 2026.
* **Account Status:** Borrowers' accounts must be classified as "standard" to qualify for support.
**Quantum of Support**
* **General Limits:** Additional credit up to 20% of peak working capital utilized during Q4 FY 26, capped at Rs. 100 crore.
* **Airline Sector Limits:** Additional credit up to 100% of outstanding facilities, capped at Rs. 1,500 crore per borrower, subject to specific conditions.
**Loan and Guarantee Tenor**
* **General Sector:** 5-year loan tenor from the first disbursement, including a 1-year moratorium.
* **Airline Sector:** 7-year loan tenor from the first disbursement, including a 2-year moratorium.
* **Guarantee Tenure:** The maximum period of guarantee cover is co-terminus with the tenor of the loan.
**Impact Analysis**
**MSMEs and Non-MSME Businesses**
**Impact**
The scheme provides critical liquidity to manage mismatches caused by the West Asia conflict, helping businesses maintain operations, protect jobs, and sustain supply chains.
**Action Required**
Eligible businesses must ensure their accounts remain in "standard" status and apply for the additional credit facility through their respective lending institutions before the March 2027 deadline.
**Airline Sector**
**Impact**
Airlines receive significant specialized support with higher credit caps and longer repayment tenors (7 years) to navigate current economic challenges.
**Action Required**
Scheduled passenger airlines must meet specific conditions set by the guidelines and utilize the credit for working capital needs within the prescribed caps.
**Member Lending Institutions (MLIs) / Banks & FIs**
**Impact**
MLIs are protected by a 90% to 100% credit guarantee from the National Credit Guarantee Trustee Company Limited (NCGTC) for defaults on additional credit extended under the scheme.
**Action Required**
MLIs must extend additional credit support to eligible borrowers and ensure all sanctions are processed within the scheme's duration ending March 31, 2027.
Key Entities Referenced
Emergency Credit Line Guarantee Scheme (ECLGS) 5.0: A government scheme providing 100% credit guarantee coverage for MSMEs and 90% for non-MSMEs/airlines to address liquidity mismatches.
National Credit Guarantee Trustee Company Limited (NCGTC): The implementing agency responsible for providing guarantee coverage to lending institutions and issuing scheme guidelines.
West Asia: The central geographical region whose geopolitical crisis serves as the primary justification for the activation of this credit support policy.
Member Lending Institutions (MLIs): Banks and financial institutions that extend the additional credit facilities to eligible borrowers under the guarantee of the NCGTC.
Cabinet
Cabinet approves Emergency Credit Line
Guarantee Scheme 5.0
To provide credit guarantee coverage through National Credit
Guarantee Trustee Company Limited to Member Lending
Institutions for extending additional credit support to eligible
business borrowers in view of West Asia situation
Targets total additional credit flow of Rs.2,55,000 crore
(including Rs.5,000 crore for airlines)
Posted On: 05 MAY 2026 6:48PM by PIB Delhi
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved Emergency Credit
Line Guarantee Scheme (ECLGS) 5.0. The scheme aims to provide credit guarantee coverage of 100% for
MSMEs and 90% for non-MSMEs as well as airline sector, to Member Lending Institutions (MLIs) by
National Credit Guarantee Trustee Company Limited (NCGTC) for the amount in default under the
additional credit facility extended to the eligible borrowers to tide over any short-term liquidity
mismatches in view of West Asia Crisis.
Salient features of the scheme:
Eligible borrowers: MSMEs and non-MSMEs with existing working capital limits and scheduled
passenger airlines having outstanding credit facilities, as of March 31, 2026, provided their accounts are
standard.
Guarantee coverage: 100% for MSMEs and 90% for non-MSMEs as well as airline sector.
Guarantee Fee: Nil.
Quantum of Support: Additional credit up to 20% of peak working capital utilised during Q4 FY 26
(capped at Rs.100 crore). For airlines up to 100% (capped at Rs.1,500 crore per borrower, subject to
satisfying certain specific conditions).
Tenor of Loan:
For MSMEs/Non MSMEs (except Airline sector): 5 years from the date of first disbursement including
moratorium of 1 year.
For airline sector: 7 years from the date of first disbursement including moratorium of 2 years.
Tenure of Guarantee Cover: Maximum period of guarantee cover shall be co-terminus with the tenor of
the loan.
Duration of the Scheme: The Scheme would be applicable to all loans sanctioned during the period from
the date of issue of these guidelines by NCGTC upto 31.03.2027
Impact:The scheme aims to enable businesses to tide over the challenges arising from the West Asia conflict.
Additionally, this is expected to help businesses maintain their operations, protect jobs, and sustain supply
chains. The proposed credit guarantee scheme is a major step to help businesses, particularly MSMEs and
airline sector, to ensure their additional working capital needs, are catered by the Banks & FIs. By
providing timely liquidity, the scheme will sustain the businesses and prevent job losses. It will also
promote uninterrupted domestic production and maintain the resilience of the ecosystem.
***
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