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Informist, Tuesday, May 5, 2026

 

NEW DELHI – The Union Cabinet on Tuesday approved the much-talked-about Emergency Credit Line Guarantee Scheme 5.0 to extend credit support to Indian businesses amid uncertainties related to the West Asia war. The Cabinet, chaired by Prime Minister Narendra Modi, approved INR 181 billion for the scheme. The government is targeting a total additional credit flow of INR 2.55 trillion under the scheme, including INR 50 billion for the aviation sector, Minister of Information and Broadcasting Ashwini Vaishnaw said.  

 

The scheme, through National Credit Guarantee Trustee Co. Ltd. aims to provide credit guarantee coverage of 100% for micro, small and medium enterprises and 90% for non-MSMEs, as well as the airline sector, for the amount in default under the additional credit facility extended to eligible borrowers to tide over any short-term liquidity mismatches in view of the West Asia crisis, the government said in a release. The scheme will apply to all loans sanctioned till the end of 2026-27 (Apr-Mar).

 

"This (ECLGS) is expected to help businesses maintain their operations, protect jobs, and sustain supply chains," the release said. "The proposed credit guarantee scheme is a major step to help businesses, particularly MSMEs and the airline sector, to ensure their additional working capital needs are catered to by the Banks & financial institutions," it added. "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."

 

Under the scheme, additional credit up to 20% of peak working capital utilised during Jan-Mar up to INR 1 billion will be given as support. For airlines, up to 100% of working capital, capped at INR 15 billion per borrower, will be given, subject to satisfying certain specific conditions.

 

For MSMEs and non-MSMEs, barring the airline sector, the tenure of the loans will be five years from the date of first disbursement, including a moratorium of one year. For the airline sector, the tenure will be for seven years from the date of first disbursement, including a moratorium of two years. "Maximum period of guarantee cover shall be co-terminus with the tenor of the loan," the government said.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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