New Delhi: The Union Cabinet approved ECLGS 5.0 to provide additional credit support to businesses facing liquidity stress due to the West Asia crisis.
The scheme will offer credit guarantee coverage through the National Credit Guarantee Trustee Company Limited to lending institutions. It aims to ensure continued access to funds for eligible borrowers. Moreover, the government targets an additional credit flow of ₹2.55 lakh crore, including ₹5,000 crore for the airline sector.
Under ECLGS 5.0, MSMEs will receive 100% guarantee coverage, while non-MSMEs and airlines will receive 90% coverage. In addition, the scheme will not charge any guarantee fee, reducing the financial burden on borrowers.
Eligible borrowers include MSMEs, non-MSMEs with existing working capital limits, and scheduled passenger airlines with standard accounts as of March 31, 2026. They can access additional credit up to 20% of peak working capital used in the fourth quarter of FY26, capped at ₹100 crore. However, airlines can avail up to 100% additional credit, capped at ₹1,500 crore per borrower under specified conditions.
ECLGS 5.0 targets liquidity support and job protection
The loan tenure for MSMEs and non-MSMEs will extend up to five years, including a one-year moratorium. Meanwhile, airlines will get a seven-year tenure with a two-year moratorium. The guarantee cover will remain valid for the entire loan duration.
The scheme will apply to loans sanctioned from the date of notification until March 31, 2027. Therefore, it is expected to provide timely relief to sectors affected by global uncertainties.
The government said ECLGS 5.0 aims to help businesses maintain operations and protect jobs. It will also support supply chains and ensure stability in domestic production.
Furthermore, the scheme seeks to strengthen economic resilience by ensuring uninterrupted credit flow. By addressing short-term liquidity gaps, it is expected to prevent disruptions across industries.
