ECLGS 5.0 crosses 4.11 lakh guarantees, backs businesses with ₹1.55 lakh crore credit cover

The Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 has crossed 4.11 lakh guarantees, with the total guaranteed amount exceeding ₹1.55 lakh crore, as the Centre stepped up liquidity support for businesses impacted by the geopolitical situation in West Asia.

According to the Finance Ministry, 4,11,497 guarantees have been issued under the scheme since its launch, taking the guaranteed amount to ₹1,55,229 crore.

The scheme provides 100% guarantee coverage on additional loans extended to micro, small and medium enterprises (MSMEs) and 90% guarantee coverage for other eligible business segments.

The scheme will cover additional credit extended by member lending institutions to eligible borrowers to help them manage short-term liquidity mismatches arising from global disruptions.

The quantum of additional credit support will be capped at 20% of the peak working capital utilised during the fourth quarter of FY26, subject to a maximum of ₹100 crore.

For airlines, the support can go up to 100% of their credit exposure, capped at ₹1,500 crore per borrower, subject to conditions.

Loans extended under the scheme will have a tenor of five years for MSMEs and non-MSMEs, including a one-year moratorium.

For airlines, the tenor will be seven years with a two-year moratorium.

The guarantee cover will be co-terminus with the loan tenure, and no guarantee fee will be charged under the scheme.

According to the government, the scheme builds on the model implemented during the COVID-19 pandemic and is designed to provide timely liquidity without creating moral hazard.

It is expected to facilitate additional credit flow of about ₹2.55 lakh crore, including ₹5,000 crore earmarked for airlines.

“The most important thing about this model is that there is no moral hazard... the possibility of misuse is practically minimal,” Union Minister Ashwini Vaishnaw had said at Cabinet briefing.

The ministry said MSMEs have been the primary beneficiaries of the scheme, accounting for 98% of all guarantees issued by number. They also received 82% of the total guaranteed amount.

To improve awareness and implementation, the Department of Financial Services has launched a nationwide outreach campaign through State Level Bankers' Committees.

The first phase of the campaign, held between May 20 and June 6, covered nine locations with participation from the National Credit Guarantee Trustee Company (NCGTC), PSB Alliance, banks, industry associations and enterprises.

The second phase is underway across 10 locations, of which four have been completed, the ministry said.

The outreach programmes are aimed at ensuring eligible borrowers are aware of the scheme and that member lending institutions are able to facilitate its implementation effectively.

The ministry said the response to ECLGS 5.0 reflects the government's efforts to strengthen the credit ecosystem and support businesses, particularly MSMEs, in meeting liquidity requirements during external disruptions.