Noida, May 6 (APAC News): The Union Cabinet, chaired by Prime Minister Narendra Modi, on Tuesday, May 5, approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to extend additional credit support to businesses facing liquidity pressures amid disruptions linked to the West Asia crisis, according to an official statement.
The scheme is aimed at facilitating additional credit flow of Rs 2.55 lakh crore, including a dedicated Rs 5,000 crore allocation for the aviation sector, through member lending institutions backed by sovereign guarantees provided by the National Credit Guarantee Trustee Company Limited (NCGTC).
Under the scheme, Micro, Small and Medium Enterprises (MSMEs) will be provided 100 per cent credit guarantee coverage on eligible incremental loans, while non-MSME borrowers and airlines will be covered up to 90 per cent, according to the statement.
#WATCH | Cabinet Briefing | Delhi: Union Minister Ashwini Vaishnaw says, “A very important scheme has been approved today to address the stress faced by our MSMEs and aviation sectors during this conflict in West Asia. The Emergency Credit Line Guarantee (ECLGS) is essentially a… pic.twitter.com/TQbRo8CNkd
— ANI (@ANI) May 5, 2026
The measure is intended to ensure uninterrupted access to working capital and help prevent disruptions in business operations.
“The approval of the Emergency Credit Line Guarantee Scheme 5.0 will ensure adequate liquidity support to MSMEs, non-MSME businesses and the aviation sector, thereby sustaining economic activity, safeguarding jobs and strengthening financial stability amid external uncertainties,” the government said in an official statement.
Eligible borrowers include micro, small and medium enterprises (MSMEs) as well as non-MSME entities having standard loan accounts and existing working capital limits as of March 31, 2026. Scheduled passenger airlines with outstanding credit facilities as of the same date are also eligible, subject to applicable conditions.
The additional credit facility may be availed up to 20 per cent of the peak working capital utilisation during the fourth quarter of FY26, subject to a cap of Rs 100 crore for most businesses.
In the case of airlines, the facility can extend up to 100 per cent of outstanding credit, with an upper ceiling of Rs 1,500 crore per borrower.
The repayment tenure for MSMEs and other businesses has been set at five years, including a moratorium period of one year. For airlines, the tenure is seven years, which includes a moratorium of two years.
The scheme will remain in force for loans sanctioned up to March 31, 2027.
The government stated that the initiative is expected to help safeguard employment, stabilise supply chains, and support overall economic activity amid external uncertainties.
ECLGS 5.0 builds on the earlier versions of the scheme introduced to extend collateral-free credit support to stressed sectors, particularly during periods of economic disruption.
Disclaimer: Views expressed are those of experts and do not reflect APAC Media. This is for informational purposes only, not financial advice. We are not responsible for investment decisions. Please consult a qualified financial advisor before investing.
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