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Informist, Friday, Aug. 28, 2026

NEW DELHI – The National Credit Guarantee Trustee Co. has stopped issuing guarantees to banks under the Emergency Credit Line Guarantee Scheme 5.0 as the fund cover approved by the government has run out, according to two officials from the credit guarantee body aware of the matter. The government was aiming at a total additional credit flow of INR 2.55 trillion when it launched the scheme on May 8 to shield domestic companies from the impact of the war in West Asia. 

"On May 8 itself the announcement clearly read that up to INR 2.5 trillion would be guaranteed or loans up to Mar. 31, 2027," one of the officials said. "We have run out of limits in both the MSME and non-MSME segment, so even if banks are sanctioning loans under the scheme, we cannot provide any more guarantees."

The official was not aware of any discussions between the National Credit Guarantee Trustee Co. and the government to expand or extend the scheme. In May, the Union Cabinet had approved INR 181 billion for the scheme to help borrowers tide over any short-term liquidity mismatches, with a timeline until the end of the financial year in March.

Under the scheme, additional credit of up to 20% of peak working capital utilised during Jan-Mar, up to a limit of INR 1 billion, could be provided as support. For airlines, credit of up to 100% of working capital is provided, subject to a cap of INR 15 billion per borrower. The trustee is the nodal government agency to provide the credit guarantee on loans sanctioned and disbursed by banks to the eligible sectors.

"We were told this week to stop the guarantees under the 5.0 scheme as the target has been met," the other official said. "So any further queries from banks we get, we have to decline."

The scheme had guaranteed credit worth nearly INR 1.91 trillion across 35 sectors as on Jul. 21, Minister of State for Finance Pankaj Chaudhary said in a written response to the Lok Sabha. Previous updates showed over 75% of the loan guarantees were to micro-, small- and medium-enterprises. According to Chaudhary, guarantees worth INR 9.12 billion were also issued to the civil aviation sector as on Jul. 31.  End

Reported by Aaryan Khanna

Edited by Akul Nishant Akhoury

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