Cabinet Clears ECLGS 5.0 To Ease Liquidity Amid West Asia Crisis
The Union Cabinet has approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to support businesses facing short-term liquidity pressures arising from the ongoing West Asia crisis. The scheme extends credit guarantee coverage to eligible borrowers, including MSMEs, larger enterprises with existing working capital limits, and scheduled passenger airlines.
To qualify, borrowers must have had outstanding credit facilities as of March 31, 2026, with accounts classified as standard. The scheme offers 100 per cent guarantee coverage for MSMEs and 90 per cent for non-MSMEs and airlines, with no guarantee fee, making access to additional funding more attractive. Guarantees will be provided through National Credit Guarantee Trustee Company Limited.
Eligible businesses can avail additional credit of up to 20 percent of their peak working capital utilisation during the fourth quarter of FY26, capped at Rs 100 crore. For airlines, the scheme allows up to 100 per cent additional credit, subject to a ceiling of Rs 1,500 crore per borrower and specific eligibility conditions.
Loan tenures vary by sector. MSMEs and other businesses will receive loans with a five-year tenure, including a one-year moratorium. Airlines will benefit from a longer tenure of seven years with a two-year moratorium, offering extended recovery support. The guarantee coverage will remain valid for the full loan tenure, and the scheme will be operational for loans sanctioned until March 31, 2027.
The initiative is expected to facilitate an additional credit flow of around Rs 2.55 lakh crore, strengthening business resilience and ensuring continuity in operations and exports during a period of global uncertainty.
Industry bodies have welcomed the move. Confederation of Indian Industry Director General Chandrajit Banerjee described the scheme as a timely intervention to shield businesses from economic pressures. Similarly, the Apparel Export Promotion Council said the measure would provide critical liquidity support to MSME exporters, helping sustain production, safeguard jobs, and maintain supply chains.
Prime Minister Narendra Modi stated that ECLGS 5.0 underscores the government’s commitment to supporting businesses, particularly MSMEs, by enabling access to credit and sustaining growth momentum during challenging global conditions.
