Guarantee issuance under ECLGS 5.0 crosses 1 lakh-mark

• The Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 was approved by the Union Cabinet on May 5, 2026.

• As on June 9, the number of guarantees issued under the ECLGS 5.0 has crossed 1 lakh, with the total amount reaching Rs 48,484 crore. 

• The scheme aims to infuse additional credit to existing borrowers to tide over the liquidity challenges arising due to the West Asia crisis.

• Out of the total coverage, 96 per cent of the guarantees in terms of number and 86 per cent in terms of guaranteed amount belong to the MSME sector. 

• Large participation by public sector banks, accounting for 96 per cent of guarantees, has ensured the quick acceptance of the scheme.

• By providing 100 per cent and 90 per cent guarantee coverage to MSME and non-MSME sectors, respectively, it has encouraged financial institutions to extend credit aggressively, ensuring that liquidity flows to the sectors that need it the most.

• ECLGS was launched in May 2020 for business enterprises in meeting their operational liabilities in view of disruption caused by COVID-19 pandemic.

Highlights of ECLGS 5.0:

• The scheme aims to provide credit guarantee coverage of 100 per cent for MSMEs and 90 per cent for non-MSMEs as well as airline sector, 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, against the backdrop of ongoing West Asia situation.

• The scheme is expected to facilitate additional credit flow of up to Rs 2.55 lakh crore.

• For the aviation sector, the scheme has specifically earmarked Rs 5,000 crore for airlines. 

• The scheme provides structured financial relief with a maximum loan limit of Rs 1,000 crore per borrower, and an additional Rs 500 crore subject to equivalent equity infusion by the borrower. 

• The loans will have a tenure of up to seven years, including a two-year moratorium on repayment, thereby easing short-term liquidity pressures.

• The longer seven-year loan tenure, along with the option to convert up to 50 per cent of interest into a Funded Interest Term Loan (FITL), is expected to ease immediate repayment pressure and improve cash flows and liquidity.

• The scheme will provide additional credit up to 20 per cent of peak working capital utilised during Q4 FY 26, capped at Rs 100 crore. 

• For airlines up to 100 per cent, capped at Rs 1,500 crore per borrower, subject to satisfying certain specific conditions. 

• Maximum period of guarantee cover shall be co-terminus with the tenure of the loan.