Providing much-needed relief to businesses facing liquidity concerns due to the West Asia conflict, the Union Cabinet on Tuesday approved Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to provide additional credit support to MSMEs and airlines.
As part of the scheme, the government will infuse an additional credit flow of Rs 2.55 lakh crore, including Rs 5,000 crore for the airline sector by providing 100 per cent credit guarantee coverage for MSMEs and 90 per cent for non-MSMEs as well as the airline sector to Member Lending Institutions for the amount in default under the additional credit facility.
Micro, Small & Medium Enterprises (MSMEs) and non-MSMEs with existing working capital limits and scheduled passenger airlines with standard account (those already making timely payments of their their loans) and outstanding credit facilities as of March 31, 2026
The government has also kept the guarantee fee at nil to ensure easier access to credit.The tenure of the loan has been set at 5 years for MSMEs and non-MSMEs, including a moratorium of 1 year.
For the airline sector, the tenure will be 7 years with a moratorium of two years.
For MSMEs and non-MSMEs, the additional credit can go up to 20 per cent of peak working capital utilised during Q4 FY26, capped at Rs 100 crore.
For airlines, the quantum of support can be up to 100 per cent, capped at Rs 1,500 crore per borrower, subject to specific conditions.
The scheme will be applicable to all loans sanctioned up to March 31, 2027.
“The scheme aims to enable businesses to tide over the challenges arising from the West Asia conflict,” the Union Cabinet said in a press release.