Cabinet Nod To ₹18,100 Cr Emergency Credit Line Guarantee Scheme To Shield Businesses From War Fallout

 The Union Cabinet has finally approved the long-awaited Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 to help businesses facing stress due to global tensions, especially the West Asia crisis.

The scheme is mainly aimed at helping MSMEs (Micro, Small and Medium Enterprises), airlines, and other affected sectors manage cash flow problems and continue operations.

The government has set aside Rs 18,100 crore for the scheme. It is expected to help generate additional loans worth up to Rs 2.55 lakh crore for businesses. Out of this, Rs 5,000 crore has been allocated specifically for the aviation sector.

“The Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 approved by the Cabinet reflects our commitment to supporting India’s businesses, especially the MSME sector in challenging global times,” Prime Minister Narendra Modi said in post on X.

“By enabling additional credit flow with strong guarantee coverage, this initiative will help a wide range of sectors. Our focus remains on empowering enterprises, sustaining growth momentum and safeguarding livelihoods,” he added.

Under the scheme, MSMEs will get a 100 percent government guarantee on loans, while non-MSMEs and airlines will get a 90 percent guarantee. This reduces the risk for banks and encourages them to lend more money.

The guarantees will be provided through the National Credit Guarantee Trustee Company Limited, which will support lenders in case of defaults.

To be eligible, businesses must have standard loan accounts as of March 31, 2026. MSMEs and other firms can borrow up to 20 percent of their peak working capital used in the last quarter of FY26, with a maximum limit of Rs 100 crore.

Airlines can borrow up to 100 percent of their existing credit, with a cap of Rs 1,500 crore per borrower.

The loans will come without any guarantee fee. For MSMEs and other businesses, the repayment period will be five years, including a one-year break before repayment starts. Airlines will get seven years, with a two-year moratorium.

The scheme will remain open for loans sanctioned until March 31, 2027.