Cabinet approves Emergency Credit Line Guarantee Scheme 5.0

• Dushyant Sharma
• 06 May 2026
• 20 Views

ECLGS full form is Emergency Credit Line Guarantee Scheme. Recently, the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 received approval from the Union Cabinet chaired by Prime Minister Shri Narendra Modi. Through this scheme, the Government of India intends to provide a 100% credit guarantee coverage for Micro, Small and Medium Enterprises (MSMEs) and a 90% coverage for non-MSMEs and the airline sector. 

This guarantee will be offered 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 arising from the West Asia Crisis. 

Features of ECLGS Scheme 2026

The salient features of the ECLGS 5.0 Scheme approved by Union Cabinet in 2026 are as follows:

• Eligible Borrowers under ECLGS: The eligible borrowers for the scheme include MSMEs as well as non-MSMEs with existing working capital limits and scheduled passenger airlines having outstanding credit facilities, as of 31 March 2026, provided their accounts are standard.

• Guarantee coverage: Under ECLGS Scheme 2026, the guarantee coverage is 100% for MSMEs. For non-MSMEs and the airline sector, the guarantee coverage is slightly less, i.e., 90%.

• Guarantee Fee: There is no guarantee fee, according to the Press Information Bureau (PIB).

• Quantum of Support: Additional credit up to 20% of the peak working capital utilized during Q4 FY 26 capped at Rs. 100 crore. For airlines, up to 100% support is available capped at Rs. 1,500 crore/per borrower, subject to meeting certain specific conditions.

• Tenor of Loan: For MSMEs and Non-MSMEs (with exclusion of airline sector), loan tenor is 5 years from date of first disbursement, including a moratorium period of 1 year. For airline sector, the loan tenor is 7 years from date of first disbursement, including a moratorium period of 2 years. 

• Tenure of Guarantee Cover: The maximum period of guarantee cover will be co-terminus with the tenor of loan.

• Duration of the Scheme: The ECLGS scheme will apply to all loans sanctioned from the date of issue of these guidelines by NCGTC until 31 March 2027.

Aim & Impact of ECLGS 5.0

Through this scheme, the Government of India aims to allow the businesses to deal with challenges resulting from the ongoing West Asia conflict, which is a regional war primarily driven by the U.S.-Israeli strikes against Iran through bases in the UAE, Kuwait, Bahrain and other nations. 

It is anticipated that the scheme will assist the businesses in maintaining their operations, safeguarding jobs of salaried individuals and sustaining the supply chains. The ECLGS 5.0 scheme is a major step to support businesses, especially those in the MSMEs and airline sector, to make sure their additional working capital requirements are catered by the Banks and the Financial Institutions. 

The scheme will provide timely liquidity and sustain the businesses and prevent job losses in the mentioned sectors. It will also provide continuous domestic production as well as maintain the resilience of the ecosystem. 

Source: Press Information Bureau (PIB)